Stocks of Netflix Are Soaring on the 'clear Path' to Better Customer Revenue

Netflix Inc. witnessed a notable surge of over 3% in its stock value on Wednesday, attributed to a bullish analysis asserting that the video-streaming giant possesses a discernible strategy for augmenting its revenue.

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Analysts at Oppenheimer expounded on this positive trajectory, noting that the average revenue per membership is set to experience acceleration. This surge is anticipated as Netflix (NFLX, -4.10%) capitalizes on advertising sales facilitated by a new service, implements subscription price increases, and takes measures to curtail password sharing.

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In the view of the analysts, these strategic endeavors are positioned to contribute to an approximate 40% augmentation in revenue compared to the fiscal year 2022 figures. Notably, this revenue expansion is foreseen to transpire at notably high incremental margins. The analysts, who maintain an outperform rating and a price target of $515, emphasized the multidimensional nature of these growth drivers, asserting that merely 2% of the anticipated benefits have materialized thus far.

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The analysts further elaborated, stating, "Our analysis indicates a clear path back to double-digit revenue growth, which should support ~25x [price to earnings]." This optimistic outlook extends to the positive influence expected from Netflix's endeavors in the realms of paid sharing and advertising tiers, encompassing the period through fiscal year 2025.

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Oppenheimer's evaluation also predicts that Netflix is poised to re-engage nearly half of the households engaged in account-sharing practices. Their estimations suggest that Netflix will directly recapture approximately 46% of the total estimated 100 million account sharers by the conclusion of 2025.

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