Streaming giant Netflix (NFLX) had an absolute winner with Kpop Demon Hunters. Just days ago, we found out this little wonder managed to hit the top of the box office, even managing to beat out Weapons in its third week. And with that in mind, the news of a sequel to come is little surprise. Netflix gained fractionally as a result in the closing minutes of Thursday afternoon’s trading.
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Sony (SONY) licensed out the property to Netflix, a move that some even now regard as the right call for Sony. Original animation is a bit of a risk at theaters these days, so passing on a property that could have gone badly made sense. “Sounds like this was new IP, they didn’t think it would land and was just bad luck for them,” noted one exhibitor.
Sony will not be left out in the cold on this; the licensing fees could provide healthy margins, potentially three times larger than normal by some reports. And with that kind of success in mind, on both sides, there is little surprise that a sequel is in the works. This is still very early-stage stuff, of course, but those who liked the first go-round may get their hands on another.
Is The Algorithm Killing Us?
Meanwhile, there are some mounting concerns that the Netflix algorithm may actually be doing damage to the concept of cinema itself. Netflix once tried to make movies that were deliberately targeted to please everyone, or as close to everyone as it could get. But the results became what one report called “…generic, forgettable, artless affairs.”
And when screenwriters get production notes like, “Have this character announce what they’re doing so that viewers who have this programme on in the background can follow along.”, it becomes clear that something has gone gravely amiss here. It is the kind of thing that could, ultimately, hurt Netflix in the end as the quality of titles released falters in a bid to tick boxes and appeal to one very narrow class of viewer.
Is Netflix Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NFLX stock based on 26 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 76.68% rally in its share price over the past year, the average NFLX price target of $1,396 per share implies 13.34% upside potential.
