Loop Capital analyst Alan Gould believes that Netflix stands to benefit from the strategies of its streaming rivals, who are slashing spending on content and raising prices in hopes of profitability. In a recent note to clients, Gould upgraded Netflix's stock to buy from hold, highlighting that the company is in the best position to thrive due to its larger pipeline of unreleased content and global production capabilities.
Despite Netflix's crackdown on password sharing, which effectively translates to a price increase for some users, Gould argues that the company still offers a greater content availability for a smaller price premium compared to its competitors. Moreover, he predicts that ongoing Hollywood strikes will further weaken traditional media and lead to increased streaming viewership.
Gould also points out the success of the back catalog of "Suits," a show that gained immense popularity on Netflix after gaining access to it in mid-June. This success serves as a testament to the quality of Netflix's user interface and the power of its network. Additionally, he notes that "Suits" is not an original or exclusive show, thereby making it a cost-effective addition to Netflix's content library.
As a result of his optimistic outlook, Gould has raised his price target for Netflix shares from $425 to $500. Currently, the stock is experiencing a more than 2% increase in Friday's trading session.
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