Netflix's growth could slow down due to interest rates: analysts

Can Netflix get his mojo back?

This is the issue that Netflix (NFLX) investors are worried about as the streaming giant prepares to launch the technology earnings season on Tuesday.

The forecast is mixed. The broadcast giant's share has seen a relative decline since its July results, which has revealed a subscriber growth below Wall Street's expectations. Investors have been ruthless in the face of this missed target and the stock has never been fully recovered: stocks are trading at more than 15% less than before the July report.

On Monday, two analysts also reduced their price targets for the stock to 12 months, with analysts Goldman Sachs and Raymond James citing rising interest rates as a factor likely to slow the growth of Netflix valuation. In the middle of a widespread sale in the market last week partially charged to interest rates, Netflix shares plunged about 6%.

In a note addressed to clients, Heath Terry, of Goldman Sachs, highlighted the positive catalysts of the action but lowered the bank's price target from $ 470 to $ 430 "to reflect the contraction multiples on the Internet, "suggesting that rising rates was" a bigger factor for stock price performance. "

As investors look closely at Netflix's quarterly performance on Tuesday, subscriber growth, international expansion, and spending are all topics that may be worthy of special attention. In July, Netflix led more than 5 million net subscribers in the third quarter, with 650,000 in the US and 4.35 million in international markets. New subscribers in international markets are of particular interest because the growth of its number of subscribers in the United States has slowed relative to other markets.

As Nomura's Mark Kelley pointed out, the competitive landscape of Netflix is ​​one of the key issues relating to the title. Competitors such as AT & T (T), Apple (AAPL), Walmart (WMT) and even Costco (COST) are preparing to enter the fray of video streaming, which could end up increasing the costs of acquiring or production of original content. "While these services present different levels of direct threats on the Netflix subscriber base, they indicate that the arms race for content is unlikely to be alleviated any time soon," wrote Kelley.

This is not all bad luck, though.

Netflix's last quarter's unsuccessful subscribers were partly linked to a weak original offering in the second quarter, but a wider range of content released in the last quarter could also have resulted in an increase in the number of Netflix subscribers in the last quarter .

"We note that content posted online in the third quarter was higher than in the second quarter, including new high-volume seasons such as Orange is New Black, Ozark and BoJack Horseman, which gives us increased confidence in the that the company can achieve its goals. "3Q subscriber assistance," added Kelley. "In addition, the latest download data from the Sensor Tower application indicate strong growth internationally, with India being the fastest growing region in the world."

Netflix publishes its results after market close on Tuesday.

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