Netflix Hit ‘Squid Game’ Proves Streamer Can Monetize Global Content

A big takeaway from Netflix‘s (NFLX) third-quarter earnings report is that the internet television network can monetize its local-language content across its global platform. More than a dozen Wall Street analysts raised their price targets on Netflix stock following the report.


“We believe Netflix’s massive hyperlocal production operations (local TV/film in 45 countries) combined with the ability to distribute content globally is creating a wider moat that, in our view, should allow it to replicate more ‘Squid Game’-type sensations over the next decade,” Oppenheimer analyst Jed Kelly said in a note to clients.

Netflix reported late Tuesday that 142 million households, or 66% of its worldwide subscriber base, had at least sampled the South Korean drama series “Squid Game” in its first four weeks. It called the series “our biggest TV show ever.”

Kelly reiterated his outperform rating on Netflix stock and increased his price target to 750 from 620.

Netflix Stock Pulls Back

In afternoon trading on the stock market today, Netflix stock fell 2.4%, near 623.80. Although Netflix beat estimates for subscriber growth in the third quarter, it disappointed with its profit outlook.

Other popular non-English-language programming on Netflix in the quarter included the latest season of “La Casa de Papel,” aka “Money Heist,” from Spain, and miniseries “The Chestnut Man” from Denmark. The German action horror movie “Blood Red Sky” also was a hit in the September quarter.

Non-English content viewing has tripled since Netflix began making original programming in 2008, Ted Sarandos, co-chief executive and chief content officer, said on a conference call with analysts.

“The stories of the world can increasingly come from anywhere in the world,” Sarandos said. First and foremost, Netflix wants local content to be successful in the targeted territories, he said. When those shows take off globally, it’s a bonus, he said.

“These are all shows that are meant to be hugely impactful and loved in territory, and if they really catch on, they travel a lot,” Sarandos said.

Flurry Of Price-Target Hikes

At least 13 Wall Street analysts with buy ratings on Netflix stock raised their price targets on Wednesday.

Meanwhile, Deutsche Bank analyst Bryan Kraft downgraded Netflix stock to hold from buy based on valuation following its recent run-up.

Wells Fargo analyst Steven Cahall maintained his overweight, or buy, rating on Netflix stock and hiked his price target to 800 from 700.

“The engagement distance between Netflix and most of its entertainment competitors feels further than ever,” Cahall said. Customers are almost treating Netflix like a utility now, he said.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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