{"id":56694,"date":"2023-09-04T06:41:45","date_gmt":"2023-09-04T10:41:45","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/suits-is-the-hit-of-the-summer-thats-great-for-netflix-stock\/"},"modified":"2023-09-04T06:41:48","modified_gmt":"2023-09-04T10:41:48","slug":"suits-is-the-hit-of-the-summer-thats-great-for-netflix-stock","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=56694","title":{"rendered":"\u2018Suits\u2019 Is the Hit of the Summer. That\u2019s Great for Netflix Stock."},"content":{"rendered":"
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Who needs new programming when you have Suits<\/em>? That\u2019s the question investors should be asking about
\n Netflix,<\/span>
\n which looks best positioned to weather the strikes that have brought Hollywood to a standstill. <\/p>\n

If you\u2019ve never watched Suits<\/em>, you\u2019re not the only one. The show, a legal drama that ran from 2011 through 2019, is best known for giving us Meghan Markle, the actress who married Prince Harry. It didn\u2019t get rave critical reviews the first time around. <\/p>\n

\n

But the show has dominated the summer streaming charts, where it has spent six weeks at the top while outpacing the next most-watched show by nearly 3 to 1 in minutes watched. No one has a good answer for why Suits<\/em> has been the summer\u2019s big winner, but it\u2019s been a boon for Netflix (ticker: NFLX), which somehow turned it into a sensation.<\/p>\n

Suits <\/em>was already streaming on both
\n Amazon
\n Prime Video and Peacock before making its way to Netflix, notes Loop Capital analyst Alan Gould. \u201cThis is not the first show [whose] popularity has skyrocketed on NFLX and in our view is a testament to the quality of the NFLX user interface and power of its network,\u201d he explains. \u201cInterestingly, Suits <\/em>was not an original show, and not an exclusive show, so likely also not an expensive show.\u201d<\/p>\n

The success of Suits <\/em>and other older shows\u2014Grey\u2019s Anatomy <\/em>and NCIS<\/em>, a personal favorite, were tied for fifth place the week ended July 30\u2014raises the odds that pure streamers like Netflix won\u2019t be forced into making a deal that goes against their interests. The same probably can\u2019t be said for streamers that own cable channels or TV stations and need new content to get viewers to tune in. Reruns just won\u2019t hack it. <\/p>\n

Recycled television is all we may have for a while. LightShed Partners analyst Richard Greenfield notes that the strike doesn\u2019t look set to end until the beginning of 2024 at the earliest as the writers and actors and studios remain far apart. <\/p>\n

Among the sticking points are how much writers and actors will get paid for successful shows and films; what success looks like; and the use of artificial intelligence in the production of new scripts and movies. The longer the two sides go without an agreement, the more damage will be done to the industry. <\/p>\n

\u201cDriving consumers to find other forms of entertainment such as YouTube, TikTok, and video gaming is a net negative for both sides, not to mention further weakening theatrical attendance as it struggles to return to pre-Covid levels,\u201d Greenfield writes. \u201cAll the parties need to return to the negotiating table and be willing to meet somewhere in the middle across the various issues.\u201d<\/p>\n

But it\u2019s possible that Netflix can win, at least on a relative basis. As Suits <\/em>has demonstrated, Netflix has the ability to get people to watch even without new shows at its disposal. In upgrading the stock to Buy from Hold on Aug. 25, Loop\u2019s Gould noted that Netflix has a large well of unreleased movies and shows it can launch, while the lack of content damages other players. <\/p>\n

\u201cWe believe the strike will accelerate the decline of the traditional TV business, benefiting streaming, and by definition, benefiting NFLX, the streaming leader,\u201d writes Gould, who put a $500 price target on the stock, up 15% from Wednesday\u2019s close. <\/p>\n

Of course, the longer the strikes go on, the more impact they\u2019ll have even on Netflix, something that worries Baird analyst Vikram Kesavabhotla. Eventually, the lack of new content would cause people to question what they are paying for, especially if all the new shows are simply old ones. <\/p>\n

\u201cWe take some comfort in the idea that NFLX is relatively better positioned to navigate these challenges in the near-term (given its extensive library and exposure to international productions), but acknowledge that progress on the strikes needs to be closely monitored,\u201d writes Kesavabhotla, who upgraded the stock to Buy in July.<\/p>\n

Still, the stock looks like a reasonable purchase right now. While Netflix shares have rallied 47% so far this year, they remain 37% below their record high of $691.69 reached on Nov. 17, 2021, and have been trading sideways for much of the past two months. As long as $400 holds, $500 seems like a reasonable target. <\/p>\n

And it will give us something to watch\u2014besides Suits<\/em>, of course.<\/p>\n

Write to <\/strong>Ben Levisohn at Ben.Levisohn@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Who needs new programming when you have Suits? That\u2019s the question investors should be asking about Netflix, which looks best positioned to weather the strikes that have brought Hollywood to a standstill. If you\u2019ve never watched Suits, you\u2019re not the only one. The show, a legal drama that ran from 2011 through 2019, is best […]<\/p>\n","protected":false},"author":1,"featured_media":56695,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-56694","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\n\u2018Suits\u2019 Is the Hit of the Summer. That\u2019s Great for Netflix Stock. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Who needs new programming when you have Suits? 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