Netflix Stock Gains Outpaced Predictions So Fast, Wall Street Now Struggles With Its Value

Shares closed Monday up 17% since last week’s stellar quarterly results, leaving analysts unsure of its direction

Netflix (Credit: Mario Tama/Getty Images)

Netflix stock has risen so high so fast, Wall Street isn’t sure how to put a value on it.

Investment research firm Seaport Research downgraded the streaming giant’s stock to “Neutral” from “Buy” on Tuesday, and removed its price target on the shares. Analysts set price targets to offer a prediction of how much growth they expect from a company in the coming year.

Seaport Research set a target of $541 on Jan. 18, days before Netflix reported a huge profit jump for the last three months of 2023 as it powered to end the year with 260.28 million subscribers. That target suggested the analyst believed Netflix shares would gain about 13% over the next year, a healthy growth rate for most stocks.

But investors were even more enthusiastic than that prediction, running the shares up 9 percent the day after the stellar earnings results and strong forecast for the current quarter. The stock continued to climb in the week since, closing Monday’s trading at $575.79, up 17% since Wednesday.

In addition to the gangbusters quarterly results, Netflix also announced its deal with TKO Group to air WWE’s “Raw” and other programming beginning in 2025 prior to the earnings.

Analysts have struggled to value the stock since. Some investment houses, including Deutsche Bank, came back with downgrades but most upped their price targets, with TD Cowen and Pivotal Research going as high as $700.

But the hikes have left the Street’s valuation estimates all over the map, with at least one target as low as $335, where the shares were in May. The median, target is $582.50, is just 3% higher than Monday’s close.

Traders pulled back on the stock after the opening bell Tuesday, sending shares down $9.19, or 1.6%, to $566.60. Trading volume, which peaked on Thursday, continued to be heavier than normal.


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