By Sam Boughedda
Investing.com — In a note to clients Monday, Needham analyst Laura Martin said that Netflix Inc (NASDAQ:NFLX) "can NOT win the "streaming wars" given its current strategy."
The analyst reiterated an Underperform rating and said Netflix needs to “add a second, lower-priced option to compete with Disney+, discovery+, Apple+, Hulu, Peacock, and Paramount+, each of which have $5-$7/month (or free) streaming services.”
Martin explained that the company needs to add an advertising tier to accelerate revenue growth and expand its total addressable market, buy an old media library to improve its content return on invested capital and add sports and news to the platform.
Furthermore, Martin reported findings from Needham’s survey of over 500 Netflix users in the U.S.
The results showed that only 50% of U.S. subscribers are happier with its content now compared to one year ago, while 81% of users watch (and 71% pay for) Netflix, suggesting more challenging U.S. subscription growth going forward.
In addition, Needham said U.S. streaming is mature, as 70% of subscribers say they will not pay for additional services in 2022, while the company's subscribers "are wealthy."
Netflix shares fell below the $400 mark Monday before bouncing back to around the $407 level, down just under 1% for the day. The company's shares sold off heavily after its Q4 earnings report including muted Q1 guidance.