Please ensure Javascript is enabled for purposes of website accessibility

Why Netflix Stock Jumped Today

By Anders Bylund – Apr 13, 2020 at 3:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The media streaming giant soared on the back of a bullish analyst report.

What happened

Shares of Netflix (NFLX 7.40%) surged as much as 7.5% on Monday as analyst firm Canaccord Genuity sketched a rosy picture of the company's prospects in 2020. By 3:05 p.m. EDT today, the stock had cooled down slightly to a 7% gain.

So what

Canaccord analyst Michael Graham raised his price target on Netflix from $415 to $450 per share, leaving a buy rating unchanged. Graham argued that the company will benefit from stay-at-home orders during the coronavirus crisis, boosting Canaccord's subscriber-addition estimates by 20% for the first quarter and 5% for the full fiscal year. The accelerated account growth, in turn, should lead to 0.5% higher revenue in the first quarter and a 1% revenue boost for the full year.

A white Netflix logo on a beige stucco wall outside the company's headquarters in Los Gatos, California.

Netflix headquarters in Los Gatos, California. Image source: Netflix.

Now what

We'll see how accurate Graham's short-term estimates were on April 21 when Netflix reports results for the first quarter of 2020. We could discuss the numeric targets all day, but there should be no question about the relative direction of the company's first-quarter results. Revenue and subscriber additions will surely beat management's original guidance, and the paused production of new content should result in lower cash expenses in the second quarter. Canaccord's report set some realistic expectations for next week's business update.

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$240.96 (7.40%) $16.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.