Why Is Netflix Stock Rising After Deutsche Bank Cut Its Price Target?

What happened

Deutsche Bank cut its price target on Netflix, which means it lowered the level it expects the stock to reach. Netflix shares had already fallen sharply, and Deutsche Bank said investors now underestimate Netflix's global growth potential.

Confirmed

Global impact / market context

A lower price target means a bank expects less stock upside, which can pressure shares. Yet the same bank said growth fears are overdone, so investors who agree may see the selloff as a chance to buy a global streaming business cheaply.

Analyst inference

Netflix stock had sold off hard before this note, so bad news was already reflected in the price. When a downgrade still comes with upbeat growth comments, buyers may step in and lift the shares even as the target falls.

Analyst inference

What to watch

1. Watch Netflix's next reported subscriber and revenue figures for signs the global growth Deutsche Bank describes is real. Confirmed
2. Watch whether other banks also cut Netflix price targets, which means lower expected stock levels, or keep them unchanged. Proposed
3. Watch whether Netflix shares hold above their recent lows, since that would show investors accepting the growth argument rather than selling further. Analyst inference

Evidence

• coinpaper.com