UBS lowered its price target for Netflix on Friday, as the company's latest quarterly report could point to more problems for the downcast streaming giant. The company - which has a neutral rating for the stock - lowered its price target for the company to $198 per share from $355. The new target implies a rise of just 13% from Thursday's close. UBS expects Netflix to report a loss of 2 million subscriptions for the second quarter, in line with management's earlier expectations. And while the second half of the year is generally stronger, the company expects a cautious outlook from the streamer given the macro uncertainty. “We believe that a combination of high penetration and macro factors (including increased inflation) may cause consumers to tighten spending,” UBS analyst John Hodulik wrote in a note Friday. “This result comes despite the strong rating performance for Season 4 of Stranger Things, suggesting that the content slate is becoming less of a driver for new domestic sub-growth.” Netflix will release its second-quarter results on Tuesday after the bell. The company lowered its estimates for the second quarter amid currency pressures and expects a 1% to 3% downward trend for management's outlook, according to the note. All regions saw a decline in downloads from Q1 levels, with global downloads falling 11%, data from the UBS lab shows. In the US, Netflix downloads fell 17% in the second quarter, but outperformed competitors such as HBO Max and Discovery+. “We see Netflix as a [long term] secular leader, but the prospect of accelerating growth again is low, leaving us neutral," Hodulik said. Going forward, efforts to increase account sharing and the new ad-supported tier could improve Netflix's financial results, according to UBS. However, that boost is likely to "The effect on earnings is less clear given the potential need to adjust content agreements," Hodulik wrote. "We expect net gains to rise back to 9.5 million in '23 (previously 11 .5 million) with a new ad-supported tier, but competition and pressure on consumers' wallets could have a negative impact." Netflix stock took a big dent this year, falling 71% in that time.
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