Netflix password crackdown: What analysts are saying

Yahoo Finance Senior Reporter Alexandra Canal breaks down what analysts are saying about Netflix's password sharing crackdown.

Video transcript

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DIANE KING HALL: Well, it's been a few days since Netflix's password sharing crackdown hit the US, and the street has been talking. Here with what analysts have to say about the new rules and impact on the streaming giant is Yahoo Finance's reporter Alexandra Canal. Ali, let's see what analysts are saying.

ALEXANDRA CANAL: Well, as expected, analysts are pretty optimistic over this rollout. We had Oppenheimer reiterating their Outperform. They also raised their price target to 450 bucks a share up from the prior 415. And that implies upside of 25% from current levels. So a lot of potential there.

Oppenheimer also conducted a survey with nearly 2000 Netflix users, and based on those results, found that Netflix could add 36 million new subscribers over the long term. On top of that, the survey results indicated that about half of current Netflix users that were either kicked off of the plan, have to sign up for new plans, they would subscribe to that ad supported tier. And we know how important the ad tier is when it comes to streaming profitability.

So ultimately, Oppenheimer is saying that future consensus estimates are not accounting for the potential of ad tier, as well as the clampdown on password sharing. I also spoke with CFRA analyst Ken Leon, who said there's an opportunity for Netflix to really build a loyal subscriber base, and that this was a long time coming. He said there will probably be a few choppy quarters from a financial perspective. But then once we hit Q4, Netflix should be in a really strong position and set it up really well for 2024.

So it's going to be an interesting few quarters, especially as Netflix reports. And we'll see how much they can gain from both ad supported and that password crackdown.

DIANE KING HALL: Yeah, no chill.

JULIE HYMAN: Yeah.