Netflix is one of the few bright spots among media names in the case of an economic slowdown, according to JPMorgan. Unlike most media names, which are sensitive to a weakening consumer backdrop and higher capital expenditures — making them vulnerable in a recessionary scenario — Netflix is comparatively less exposed to these factors, said analyst Doug Anmuth. “In terms of macro and the consumer, while NFLX is certainly not immune, we believe the service represents compelling value, even with ongoing price increases,” Anmuth wrote in a Tuesday note. As for capex, the streaming giant is expected to spend around $17 billion this year, but most of this investment is not related to AI spending unlike other big tech companies, he said. The analyst has an overweight rating on the stock. His price target of $750 indicates around 18.5% upside potential from Monday’s close. Year to date, the stock is nearly 32% higher. In the last few weeks, the stock has outperformed the broader market. Netflix shares are trading just 2% lower following its second-quarter earnings announcement on July 18, whereas the S & P 500 is currently down 4% over the same period. In the second quarter, Netflix reported a 34% yearly increase in its ad-supported memberships, and total memberships topped analysts’ forecasts. Anmuth added, “We generally view subscription services like NFLX (and SPOT ) as being more resilient during periods of macro pressure.” A potential weak spot for Netflix may be a softening digital ad market. Nonetheless, ad revenue numbers for the company remain small. “We like how NFLX is positioned as it targets 500M+ global [connected TV] households, & we believe the company controls its destiny more than most in our coverage universe,” said Anmuth. As for Spotify, that stock has been a strong performer this year, with shares up 80% year to date. —CNBC’s Michael Bloom contributed to this report.
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