(News Bulletin 247) – The online video platform has banned since the end of May the sharing of connections with people who are not part of the same household in many countries, except to pay an option. Since then, its share has taken more than 20%.

It was the big catalyst analysts were waiting for: Netflix’s offensive to fight abusive account sharing. And given the group’s stock market history, it clearly worked.

On May 23, the online video-watching platform announced a massive expansion of its restrictions preventing the sharing of passwords with people outside the same household. That is to say when a user “borrows” identifiers from a subscriber to view the content without having to pay the subscription.

A hundred countries were thus concerned, including France and the United States, while Netflix had already implemented these measures in Latin America as well as in Canada.

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A “raid” on 100 million pirate connections

It is therefore a “raid” of substantial magnitude that the platform has launched to try to reduce a significant shortfall. According to the group’s estimates, 100 million households worldwide use an account to which they do not pay for access, and 30 million in the United States and Canada.

To continue to share their account, subscribers can use an option, of 6 euros per month in France, which is only available for “standard” and “premium” subscriptions. The option adds a person outside the household in the case of the standard subscription and two for the premium. The option is not available for subscribers to the offer with advertising and to the “essential” offer. These additional members have their own accounts and passwords but the subscription is therefore paid for by the existing user.

The offensive seems to be bearing fruit. According to Bloomberg, citing data from research firm Antenna, the group averaged more than 70,000 new subscriptions in the four days following the May 23 announcement. This represents more than double the average of the 60 days preceding this same announcement.

A stock market rally

Wall Street appreciates. Since May 23, the group’s share price has risen from 356 dollars to 446.40 dollars currently, an increase of 25% in the space of three weeks.

The takeoff may not be over. Quoted by Business Insider, Bank of America raised its price target to $490 from $430 previously. The bank estimates that if 60% of “free riders” borrowing an account in the United States were to turn into an option payment ($8 per month in the United States), Netflix would increase its annual revenue by $2 billion ( out of a total of 31.6 billion in 2023).

Guggenheim analyst Michael Morris rose to $500 from $375 previously. “We estimate that more restrictive measures on out-of-home use will support growth to approximately 21 million paid sharing subaccounts and approximately 15.4 million accounts with advertising by Q2 2024,” he explains in a note quoted by Barron’s.

These targets give the stock a 12% potential, which would add around twenty billion dollars to Netflix’s market capitalization.