Netflix Shares Look for a Breakout on Subscription Crackdown

The price of Netflix (NFLX) shares has rallied from the lows around mid-March and is looking to press higher. The company is seeking to boost revenues by cracking down on subscription sharing of its streaming service.

NFLX – Daily Chart

NFLX – Daily Chart

NFLX stock currently trades at $342.35, and the resistance for a move higher is close. Netflix can push to the $380 high or support costs $320 for a correction. 

The media streaming company is looking to boost its revenue by cracking down on the ability of users to share subscriptions across different locations. That strategy and the new lower-cost subscription tier service containing advertising could boost user growth and maintain momentum in Netflix’s stock price.

Shares of Netflix are up more than double from the five-year low seen last year after the company posted its first subscriber loss for a quarter. However, the stock price remains about 50% below an all-time high from late 2021. Third Bridge has called it a “huge opportunity” for the company as “there are millions of people on shared accounts, and if you get a few bucks per month out of even a small percentage of them, that creates a huge recurring revenue base that can supplement current growth.”

Netflix Stock Prediction

Netflix estimated that more than 100 million people use its service without paying. Analysts expect an additional 2.3 million subscribers when it reports Q1 earnings results on April 18. That would bring the total paid membership number to 233 million. Even if Netflix can monetize 10-20% of its non-paying users, it could significantly boost its bottom line. 

Wells Fargo analysts see the crackdown by Netflix on shared passwords as one of the critical drivers for earnings optimism. The bank’s researchers said the strategy “appears to be creating significant upside to estimates” as “paid sharing is arguably the bigger near-term earnings opportunity.” Meanwhile, Bank of America analysts say they expect subscriber results for the US and Canada to be “significantly stronger” than current Wall Street estimates.

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