The movie theater is dead. At least, that is what entertainment giant Netflix (NFLX) would prefer you believe. But it has some data on its side that suggests this might indeed be the case, or getting close to it, anyway. Oddly, investors did not take the news well, as Netflix stock slumped modestly in the closing minutes of Tuesday’s trading.
Ted Sarandos, in an interview with Semafor, noted that “Nearly every live thing has come back screaming.” From concerts to sports, live events have come rocketing back, and we have seen as much with several recent news stories as well. Especially after several analysts, not two weeks ago, declared Live Nation Entertainment (LYV) a buying opportunity.
But can the same be said for the theater? In some cases, yes; after all, we just saw the hit that Warner Bros Discovery (WBD) took in theaters. And, as Ted Sarandos pointed out, the theatrical box office is already down 8% just this year so far. That led to the most insidious remark of all from Sarandos: “What is the consumer trying to tell you?”.
Triple H Said So
Meanwhile, one of Netflix’s own forays into live sports, WWE wrestling, actually has very little to do with Netflix itself. That is the word from no less than Paul Levesque, otherwise known as Triple H, the WWE’s chief content officer. It is the WWE that decides much of its own action: it makes the superstars. It creates the storylines. It was behind the recent heel-face turn—or perhaps face-heel turn—staged by John Cena, which caught the wrestling world’s attention.
That is not to say that Netflix has no say in things at all, Levesque made clear. Netflix does decide how long the show runs, and when it starts and stops. Netflix is essentially a distributor, and as such, does not make many of the critical decisions. This might be for the best; when WWE Raw started airing on Netflix back in January, it quickly became a hit in the UK, a top 10 show for nine out of 10 weeks.
Is Netflix Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NFLX stock based on 30 Buys, 10 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 49.87% rally in its share price over the past year, the average NFLX price target of $1,109 per share implies 20.01% upside potential.
