Disney+ is a 'global predator' for Netflix subscribers: analyst

·Executive Editor

March 15, 2021 at 12:44 PM·3 min read

While Netflix attempts to squash those scrubbing login passwords for the service from friends and family, it really should be looking over its own shoulders so it doesn't get squashed by Disney's streaming service.

That's the good word from Needham analyst Laura Martin, who rates Netflix (NFLX) shares an Underperform.

"We see Disney+ as a global predator for Netflix subs, reaching 100 million subs just 16 months after launch. It took Netflix 10 years to reach 100 million subs," Martin said in a new research note making the rounds on Monday. Netflix ended 2020 with about 210 million paid global subscribers. Martin said the low $6.99 price point for Disney+ — which has racked up more than 100 million subscribers and has a barrage of original content on tap this year — should allow it to make strong inroads into Netflix's subscriber base.

Martin told Yahoo Finance Live the combination of new streaming competitors such as Disney+ and ViacomCBS's Paramount+ and consumers leaving their homes post vaccination could mean limited pricing power for Netflix.

And by extension, a huge dent to the super bullish thesis on Netflix shares.

"Yes, I think so," Martin said on whether Netflix could have challenges successfully raising prices again. Netflix last raised prices in October 2020.

"If they do raise prices, they will lose subscribers and that by far is the biggest risk to valuation," Martin added. "They trade at eight times revenue because they have growth credentials, which equates to a 35 times EBITDA multiple. It's our view if they start losing subscribers, they will lose their growth credentials and be forced to be valued on a EV/EBITDA basis and give the stock 50% downside."

Netflix media service provider's logo is displayed on the screen of an iPhone in front of a television screen on March 28, 2020. (Photo Illustration by Chesnot/Getty Images) (Chesnot via Getty Images)

Thus far, Martin's counterparts on the Street are staying hopeful the streaming giant could fend off its new rivals and still thrive during the global reopening from the pandemic.

Of the 43 sell-side analysts that cover Netflix, 30 rate the stock the equivalent of a Buy, according to Bloomberg data. The average analyst price target on Netflix shares is $615, or about 21% above current levels.

But cracks in Netflix shares are emerging as investors position for year of slower growth.

The stock has underperformed the Nasdaq Composite dating back to mid-November 2020. Year-to-date shares are down 5.5% compared to a 3% rise for the Nasdaq.

Recall in mid-January, Netflix outlined 14.7% growth in global streaming paid memberships. If hit, that would be a sharp deceleration from the year ago first quarter (+22.8%) as the pandemic sent people indoors. It would also mark a slowdown in growth from 21.9% in the fourth quarter of 2020.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

What’s hot from Sozzi:

Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, and LinkedIn.

AFP
Spacecraft to swing by Earth, Moon on path to Jupiter
A spacecraft launched last year will slingshot back around Earth and the Moon next month in a high-stakes, world-first manoeuvre as it pinballs its way through the Solar System to Jupiter.NASA's Europa Clipper spacecraft is scheduled to launch this October yet beat Juice to Jupiter's moons by a year.
TODAY
45 Halloween snack ideas from savory to spooky sweet treats
Up your Halloween snack game with these positively spooky snack recipes.
AFP
What's the fallout of Mexican drug lords' capture?
Two top leaders of Mexico's Sinaloa drug cartel were arrested by US agents in Texas during a dramatic operation and without the involvment of Mexican authorities.- Diplomatic repercussions - The Mexican authorities said they were not involved in Thursday's operation or told about it beforehand.
USA TODAY
FBI confirms that a sniper's bullet caused Donald Trump's ear injury
After nearly two weeks of vague statements that prompted criticism, the lead investigation agency in Trump's near-assassination issues statement
Associated Press
Arizona judge rejects GOP wording for voters' abortion ballot initiative pamphlet
A judge on Friday rejected an effort by GOP lawmakers to use the term “unborn human being” to refer to a fetus in the pamphlet that Arizona voters will use to weigh a ballot measure that would expand abortion access in the state. Maricopa County Superior Court Judge Christopher Whitten said the wording the legislative council suggested is “packed with emotion and partisan meaning” and asked for what he called more “neutral” language. The measure aims to expand abortion access from 15 weeks to 24 weeks – the point at which a fetus can survive outside the womb.
CNN
California’s Park Fire 0% contained as more than a thousand battle 178,000 acre blaze
Hot and dry weather fuels wildfires in the Western United States and Canada, with fires damaging homes, causing injuries and forcing evacuations. Here’s the latest.
AFP
Concern grows as Venezuela blocks election observers
Concerns grew Friday over the fairness of Venezuela's presidential elections as Caracas was accused of blocking international observers from arriving for the Sunday vote, including a delegation of ex-presidents.His government agreed with the opposition last year to hold free and fair elections in 2024, with international observers present -- winning a temporary easing of sanctions from the United States.
NBC News
Smoke from wildfires in Canada and the West Coast spreads across North America
Intense wildfires in western Canada have sent plumes of smoke across North America, and fires in Oregon, Idaho and California are also causing air quality to drop.
NBC News
Pilot of air tanker that went missing fighting Oregon wildfire is found dead
A pilot has been found dead after the air tanker he was flying was reported missing near the scene of a wildfire in Oregon, authorities said Friday.
AFP
G20 pledges to work together to tax ultra-rich
G20 nations have agreed to work together to make the super-rich pay their taxes, but stopped short of a more substantial deal, according to a declaration adopted Friday after a meeting of finance ministers in Rio de Janeiro.Brazil's Finance Minister Fernando Haddad said that "from a moral point of view it is important that the twenty richest nations consider that we have a problem, which is to have progressive taxation on the poor and not on the rich."
NBC News
'Make Bitcoin Great Again': Specter of Trump — and absence of Harris — hangs over annual crypto gathering
NASHVILLE — Charlene Brown arrived at the first full day of Bitcoin 2024 at the Music City Center convention complex with two signs in hand: “Orange Man Good” and “Bitcoin Don.”
Associated Press
Homeless people say they will likely return to sites if California clears them under Newsom's order
Three years ago, Joel Hernandez built a small wooden shack under the 405 freeway cutting through Los Angeles. Hernandez has had similar homes be cleared in homeless encampment sweeps by state or city authorities over the years, so the 62-year-old is taking in stride that his days in his makeshift shelter on state-owned land might be numbered. California Gov. Gavin Newsom on Thursday issued an executive order directing state agencies to start clearing homeless encampments on state land, including lots under freeways.
CNN
Trump was struck by bullet in assassination attempt, FBI says
The FBI said Friday that Donald Trump was hit by a bullet, or a fragment from it, fired by the would-be assassin at his Pennsylvania rally earlier this month.
USA TODAY
Video shows flaming object streaking across sky in Mexico, could be remnants of rocket
A flaming object was spotted soaring across the sky in Chihuahua, Mexico, could be a Japanese satellite rocket named Michibik that launched in 2010.
AFP
FBI confirms Trump hit by bullet in assassination attempt
Former US president Donald Trump was indeed hit by an assassin's bullet or a fragment of one, the Federal Bureau of Investigation said Friday, putting to rest questions over the nature of the Republican candidate's wounding at a campaign rally this month."What struck former President Trump in the ear was a bullet, whether whole or fragmented into smaller pieces, fired from the deceased subject's rifle," the FBI said in a statement.
Associated Press
Jon Stewart pushes VA to cover troops sickened by uranium after 9/11. Again, they are told to wait
Comedian Jon Stewart and troops sickened by uranium ended a meeting Friday at the Department of Veterans Affairs angry that once again they have been told they will have to wait to see whether the VA will connect their illnesses to the toxic base where they were deployed shortly after 9/11. The denied claims were supposed to have been fixed by the PACT Act, a major veterans aid package bill that President Joe Biden signed in 2022 and said is one of his proudest accomplishments in office. Just weeks after the attacks, special operations forces were sent to Karshi-Khanabad, Uzbekistan, or K2, a badly contaminated former Soviet base that was a strategic location for launching operations against the Taliban in Afghanistan.
NBC News
Sonya Massey's family questions how deputy was hired given past: 'There were so many red flags'
Sonya Massey’s family questioned how the deputy charged in her death was hired by the Sangamon County Sheriff’s Office after he had been employed by six agencies in a four-year period, admitted to driving under the influence and was the subject of two previous complaints.
Associated Press
Key Pakistani Islamist party begins sit-in to protest increase in electricity bills
Hundreds of supporters of a key Islamist party began a sit-in protest in the garrison city of Rawalpindi late Friday after authorities detained dozens to prevent them from holding the rally in Pakistan's neighboring capital, citing security reasons, officials said. The Jamaat-e-Islami Pakistan party originally issued a call for holding the sit-in near the parliament building in Islamabad to pressure the government to withdraw a substantial increase in electricity costs, which have drawn nationwide criticism. Naeem-ur-Rehman, who heads Jamaat-e-Islami Pakistan, told demonstrators in Rawalpindi that he was willing to stage the sit-in even for weeks.
NBC News
Harris could present a new challenge for Netanyahu: From the Politics Desk
Vice President Kamala Harris presents a new challenge for Israeli Prime Minister Benjamin Netanyahu as he visits the U.S. amid the war with Hamas in Gaza.
Associated Press
Judge strikes down one North Carolina abortion restriction but upholds another
A federal judge ruled Friday that a provision in North Carolina's abortion laws requiring doctors to document the location of a pregnancy before prescribing abortion pills should be blocked permanently, affirming that it was too vague to be enforced reasonably. The implementation of that requirement was already halted last year by U.S. District Judge Catherine Eagles until a lawsuit challenging portions of the abortion law enacted by the Republican-dominated General Assembly in 2023 was litigated further. Eagles now says a permanent injunction would be issued at some point.

Latest Stories