Netflix May Crack Down on password sharing. What it means for the stock.

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Netflix

stocks rose on Monday as analysts on both sides of the Bull-Bear debate uncovered possible plans to overcome password sharing.

Benchmark analyst Matthew Harrigan, who estimates the Sell stock, lowered its price target to $ 472 from $ 485. Harrigan cites reports that some consumers received messages Friday asks them to create their own account if they don’t live with the subscriber themselves.

“This test is designed to ensure that people who use Netflix accounts are authorized to do so,” a spokesperson told MarketWatch.

Harrigan argues that such a breakdown is necessary. He cites estimates from research firm Magid that about 33% of Netflix members share passwords but argues that those who benefit from password sharing could be hackers. -use more casual or economically sensitive.

“While a breakdown of password sharing may seem like a long-term positive thing at least, we think it’s something that harms the power of pricing even as competition from Disney + and others going up, ”he writes.

Harrigan said Netflix’s stock demand has been reduced by increased competition from Disney + and the distribution of Covid-19 vaccines. It is estimated that Netflix will hit 313 million global members in 2024, not far ahead

Walt Disney‘s

(DIS) is a global target of 230 million to 260 million Disney + subscribers by fiscal time 2024.

“Disney is sure to emerge as the overall global streaming leader if ESPN + and Hulu are also combined,” he writes. “Disney + delivered 100M global subscribers to its platforms earlier this month just 16 months after its launch – which took Netflix ten years to complete. ”

On the side of the debate is BMO Capital Markets analyst Daniel Salmon, who has an Outperform rating and a $ 700 price target. He titled his note late Sunday, “The Password: StillTopPick42021.”

He argues that Netflix never had the option of calling out password-sharing in its back pocket, and he believes that such a move can lead to a huge addition of subscribers and facilitating member growth as the company approaches year-over-year difficult comparisons since the 2020 closures. The move could overturn consensus expectations for subscribers during the first fiscal quarter , according to Salmon.

Netflix stock rose 0.4% to $ 520.25 on Monday, while the

S&P 500 index

it went up about 0.7%. 40 analysts cover the stock listed by FactSet. Of that group, 27 analysts have a Buy or equivalent rating, and four have Sell or equivalent ratings. The rest is in between. But the average price target for the stock is $ 626.88, according to FactSet, which means about 20% upside from recent levels.

Write to Connor Smith at [email protected]