Netflix to Acquire Next Games

Netflix (NFLX) has agreed to acquire Finland-based mobile games developer Next Games. The transaction is expected to be completed in Q2 2022. NFLX shares fell 1.61% to close at $380.03 on March 2.

Netflix operates a video streaming platform offering television shows, films, and documentaries to more than 220 million subscribers around the world. The company is expanding into gaming content as well.

Value of the Deal

Michael Verdu, Netflix’s Vice President of Games said that the Next Games acquisition would expand Netflix’s internal game studio capabilities.

“While we’re just getting started in games, I am confident that together with Next Games we will be able to build a portfolio of world class games that will delight our members around the world,” commented Verdu.

Netflix has agreed to acquire Next Games for 2.1 euros per share, valuing the game developer at about 65 million euros. It plans to pay for the acquisition in cash. Next Games’ board has endorsed the Netflix deal and has recommended that shareholders accept it as well.

Games Inspired By Movies and Books

Founded in 2013, Next Games develops mobile games based on popular movies, television series, and books. Its latest title, Stranger Things: Puzzle Tales is based on Netflix’s hit drama series Stranger Things. It has also developed The Walking Dead-inspired games.

In 2020, Next Games generated 27.2 million euros in sales. The company draws the vast majority of its revenue from in-game purchases. The company ended 2021 with a team of 120 employees.

Stock Rating

Last month, J.P. Morgan analyst Doug Anmuth reiterated a Buy rating on Netflix stock with a price target of $605, implying 59.20% upside potential to current levels.

Consensus among analysts is a Moderate Buy based on 18 Buys, 14 Holds, and 3 Sells. The average Netflix price target of $512.45 implies 34.84% upside potential to current levels.

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