Netflix Q4 Subscriber Growth Trending Below Guidance Says Analyst

Netflix (NASDAQ: NFLX) shares rallied 3.92% in Tuesday's session as the stock continues to rebound from last year's lows, but Barclays analyst Kannan Venkateshwar believes the company's fourth quarter subscriber growth is below guidance.

The analyst told investors in a research note that Netflix's Q4 subscriber growth looks to be trending below guidance, on the path to adding around 2.7 million subscribers compared to guidance of 4.5 million.

Venkateshwar, who maintained the firm's Equal Weight rating on Netflix shares, believes the recent stock outperformance is primarily a function of investor positioning rather than a fundamental change in the growth narrative or expectations. As a result, he believes there could be “meaningful” stock volatility around the streaming giant's earnings release, which is expected on January 19.

On Monday, JPMorgan analyst Doug Anmuth told investors in a memo that he remains bullish on Netflix shares heading into its earnings report. Anmuth stated that he likes Netflix's ability to reaccelerate revenue, expand operating margins and grow free cash flow in 2023.

However, the JPMorgan analyst wasn't as positive about Netflix's ad-supported tier. He said it is still very early, and its impact will take time, and Netflix has done limited promotion or marketing, meaning overall consumer awareness is low. Therefore, Anmuth, who maintained an Overweight rating and $330 price target on the stock, projects “only” 250,000 net adds in Q4 to the ad tier.