'Full House'? Sure, if it gets Netflix subscribers

"Full House" cast members John Stamos, Jodie Sweetin, Bob Saget, Lori Loughlin and Dave Coulier in 2008.
Jason LaVeris | FilmMagic | Getty Images

"Full House" Netflix? Really?

While a remake of the Bob Saget-vehicle from 20 years ago would seem to be a highly unlikely business proposition to many, for a company whose livelihood depends solely on subscribers, it's a logical strategy.

Netflix just needs to get a few aging Gen Xers who still say "Have Mercy" to add the service in order to justify this odd pop culture reawakening.

This strategy continues to mystify Wall Street analysts, who have downgraded the stock this year to their own peril by focusing on rising content acquisition costs.

One analyst that gets it is Mark May of Citigroup.

"Bears continue to point to NFLX's cash burn & rising content obligations. In our view, subscriber growth is the most important metric that impacts NFLX shares," the analyst wrote in a report to clients Tuesday.

Netflix stock vs subscriber adds

On the chart above, Citi overlays the stock's movement on the day after earnings vs. the subscriber additions announced as part of the earnings announcement. The two had a positively correlated response on 75 percent of the earnings releases over the last three years.

The analyst built a valuation model based mostly on subscriber projections because of this phenomenon and believes the upside to Netflix is $780 to $860 a share, or as much as 50 percent higher from the current level of about $559 a share.

Netflix shares jumped 18 percent last Thursday after the company added 2.28 million domestic subscribers and 2.6 million international subscribers last quarter on the back of original programming like "House of Cards," "The Unbreakable Kimmy Schmidt" and remakes like "Inspector Gadget." The stock is now up 65 percent in 2015.

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But most analysts haven't kept up as the stock is now ahead of their consensus 12-month price target, which are mostly determined on the value of future earnings.

Michael Pachter of Wedbush wrote in a report titled "Another quarter of costly and impressive subscriber additions":

"While we acknowledge that Netflix's subscriber growth is impressive, we remain skeptical that it can deliver the leverage many investors expect. Content costs are on the rise, as evidenced by the $626 million increase in streaming content liabilities in Q1. The company has added over $2.6 billion to its streaming content library over the last two quarters, while amortizing only $1.5 billion of this amount, meaning that it has deferred recognition of over $1 billion in streaming content spending in the last two quarters alone."

Pachter rates the shares "underperform" as does Ken Sena of EverCore ISI, who downgraded the stock on a month ago.

"Our March 16th downgrade to sell was not a call into quarter but rather a view that the cash cost of its global expansion and content strategy (+60 percent q/q and 115 percent y/y) and in the face of new scaled video entrants challenges our acceptance of current valuation," Sena wrote after the earnings results.

C'mon analysts. Stop hating on Dave Coulier.

—With reporting by CNBC's Carl Quintanilla