On the fly News and insights, exclusive to thefly.com

NFLX

Netflix

$508.91 /

+11.78 (+2.37%)

, CMCSA

Comcast

$57.64 /

+0.35 (+0.61%)

07:56
06/23/21
06/23
07:56
06/23/21
07:56

Netflix stance on ads 'materially value-destructive,' says Needham

Netflix (NFLX) not taking advertising dollars lowers the return on invested capital "materially" for investors, lowers the company's valuation multiple compared with dual revenue stream business models, and funds its subscription video-on-demand competitors, thereby undermining its ability to win the "Streaming Wars," Needham analyst Laura Martin tells investors in a research note. At traditional linear TVs $70 per year per subscriber of ad revenue, Netflix is forgoing advertising revenue of $14B per year, thereby ignoring 56% potential upside to its 2020 reported sales, sales the analyst. At Roku's $40 per year per subscriber of ad revenue, Netflix is forgoing advertising revenue of $8B per year, adds the analyst. She believes Netflix's stance that it will never have ads in its content is "materially value-destructive." It is also "value-creating" for direct competitors including Comcast's (CMCSA) Peacock and Discovery's (DISCA) Discovery, says Martin. She believes adding an "ad-light" tier could be structured as a new lower-priced option, which could expand Netflix's total addressable market and add new price-sensitive customers, not cannibalize its high-priced current subs. Martin keeps an Underperform rating on Netflix.

NFLX

Netflix

$508.91 /

+11.78 (+2.37%)

CMCSA

Comcast

$57.64 /

+0.35 (+0.61%)

DIS

Disney

$173.51 /

-0.47 (-0.27%)

DISCA

Discovery

$29.49 /

-0.21 (-0.71%)

ROKU

Roku

$403.52 /

+20.22 (+5.28%)

  • 20

    Jul

  • 29

    Jul

  • 14

    Apr

NFLX Netflix
$508.91 /

+11.78 (+2.37%)

06/22/21 Benchmark
Netflix deal with Spielberg 'hardly appears as a game changer,' says Benchmark
06/17/21 KeyBanc
KeyBanc says Netflix tracking below estimates, sees light at end of the tunnel
06/16/21 JPMorgan
JPMorgan 'incrementally positive' on Netflix into second half content slate
06/01/21 KGI Securities
Netflix initiated with a Neutral at KGI Securities
CMCSA Comcast
$57.64 /

+0.35 (+0.61%)

06/22/21 Needham
WWE too small to 'go it alone' in today's streaming world, says Needham
06/17/21 TD Securities
TD upgrades Altice USA to Buy ahead of second half growth pickup
05/24/21 HSBC
Comcast price target raised to $64 from $56 at HSBC
05/18/21 Benchmark
Comcast selloff on Discovery-WarnerMedia news 'excessive,' says Benchmark
DIS Disney
$173.51 /

-0.47 (-0.27%)

06/10/21 Wolfe Research
Wolfe says Disney risk/reward 'compelling,' keeps $226 price target
05/26/21 Piper Sandler
Amazon deal to buy MGM Studios 'looks sensible,' says Piper Sandler
05/26/21 Truist
Amazon's MGM deal 'a very modest negative' for Netflix/Disney, says Truist
05/18/21 Morgan Stanley
Morgan Stanley says Amazon-MGM would be 'biggest signal yet' of streaming focus
DISCA Discovery
$29.49 /

-0.21 (-0.71%)

05/24/21
Fly Intel: Top five analyst downgrades
05/24/21 Morgan Stanley
AT&T price target lowered to $32 from $34 at Morgan Stanley
05/24/21 MoffettNathanson
MoffettNathanson downgrades Discovery to Neutral after WarnerMedia deal news
05/24/21 MoffettNathanson
Discovery downgraded to Neutral from Buy at MoffettNathanson
ROKU Roku
$403.52 /

+20.22 (+5.28%)

06/23/21 Deutsche Bank
Roku should continue to trade at premium valuation, says Deutsche Bank
05/14/21 Citi
Roku price target lowered to $450 from $460 at Citi
05/12/21 Alliance Global Partners
Alliance Global Partners bullish on Cinedigm, sees Roku among catalysts

Get Full Fly Access

Breaking market intelligence sent straight to you
Our team of experts analyze every news story and filter out the noise to deliver real-time market moving news.
Up-to-date information on important industry events
Get real-time updates on events that are moving the market—from conferences and calls to syndicate announcements.
News focused on the companies in your portfolio
Create up to 12 portfolios with 150 stocks each, and see how active they are in market news.