Password sharing crackdown in U.S. can lead to big gains for Netflix, Oppenheimer says

Published Wed, May 24 20237:36 AM EDTUpdated Wed, May 24 202311:45 AM EDT

Netflix is worth buying as the global crackdown on password sharing comes to the U.S., according to Oppenheimer. Analyst Jason Helfstein upped his price target by $35 to $450, while reiterating his outperform rating. His new price target implies an upside of 26.4% over Tuesday's close. Netflix said Tuesday it began notifying U.S. customers they could either send a profile so someone else could make their own account or pay a $7.99 fee per additional user outside the household. It's the latest development in the streaming giant's global bid to crack down on password sharing, with new regulations previously rolled out in international markets. Helfstein cited a firm survey of about 1,800 Netflix users in the U.S. that showed a solid amount would pay for extra users, while at least some of those whose account managers wouldn't pay said they would get their own. Almost half of users surveyed have at least one user on their account not in their household. "The survey supports our thesis that paid sharing will drive ARM higher, as well as push subscribers to the ad tier," he said in a note to clients Tuesday, using an acronym for average revenue per member. While 45% of respondents said they would pay for extra users, there's also the option for those extra profiles to make their own accounts. There's also the cheaper, ad-supported tier , whose presence, he said, can improve subscriber growth, increase average revenue per user and keep subscribers from leaving the platform. Ultimately, Helfstein said the survey supports management's target of 30 million new subscriptions. More than half the respondents who would not sign up after losing access said content was a major reason. With the importance of content quality in mind, Helfstein said Netflix could be well-positioned if it keeps up spending on content while competitors pull back to focus on profitability. Shares have rallied more than 20% this year, regaining some ground after tumbling more than 50% in 2022. NFLX 5Y mountain Netflix Helfstein's price target increase puts him on the high end of Wall Street analysts. The average analyst expects the stock to reach a relatively modest $361.71 per share in the next year, according to Refinitiv. — CNBC's Michael Bloom contributed to this report.