Netflix rises even as UBS predicts Q2 subscriber growth goes 'upside down'
Wachiwit

Netflix (NASDAQ:NFLX) shares rose on Friday ahead of the company's second-quarter report, scheduled for July 19, though investment firm UBS is not expecting a banner result. 
Analyst John Hodulik, who rates Netflix (NFLX) shares neutral, lowered the price target to $198 from $355, as he believes subscribers "tracked in-line" with management's previous forecast for a loss of 2M, due in part to price increases in the U.S. and Canada and parts of Europe.
"While [second-half] is seasonally stronger (~70% of '21; 50% pre-pandemic), we expect a cautious guide amid macro uncertainty," Hodulik wrote in a note to clients, adding that 1.3M subscribers are expected to be added in the third-quarter and 2.8M for the year. 
Netflix (NFLX) shares rose fractionally to $175.29 in premarket trading.
In addition, Hodulik lowered second-quarter estimates on foreign exchange pressure and now thinks there could be between 1% and 3% downside to management's outlook, with revenue growing only 7.3% in 2022, compared to a previous estimate of 8.1%. 
UBS also noted that their app download data showed a 4% year-over-year drop and 11% sequentially, in the quarter. 
Netflix (NFLX) is trying to reinvigorate growth, with an ad-supported tier -- for which it will partner with Microsoft (NASDAQ:MSFT) -- as well as cracking down on account sharing, but those initiatives are likely to take as long as two years to show any results. 
"We expect net adds in '23 to bounce back to 9.5M (prior 11.5M) with a new ad-supported tier helping, but competition & pressure on consumer wallets could drive downside," Hodulik wrote.
On Thursday, investment firm Benchmark said it remained "cautious" on Netflix (NFLX), despite the Microsoft (MSFT) advertising announcement.