Netflix (NFLX) stock fell on Thursday after reports emerged that the company was selling one of its video game studios. Netflix has started adding video games to its streaming app in recent years, adding to its wide selection of movies and TV shows, including original programming. Cozy Grove and Alphabear developer Spry Fox has reportedly been sold back to the studio’s founders to continue development on their next game, Spirit Crossing.
The news sparked fears that Netflix would exit the gaming sector, and the stock price fell several percentage points. The company’s stock has fallen 5% over the past month, but remains the year’s top performer, up more than 16% since January. Investor reaction was cautious, with Netflix’s stock falling to a seven-month low amid concerns about integration challenges and debt burden.
On the other hand, most experts aren’t too worried about the decline or the sale of the studio. Rather than focusing on original games for its service, Netflix has shifted its focus to creating games based on its own works and other established series. The streaming service also found that social gaming performs well on its platform. Therefore, the need for Spry Fox studios was missing.
Additionally, Netflix (NFLX) remains one of the best-performing entertainment stocks on the U.S. stock market. The streaming giant has made a new announcement. 1:10 stock split Earlier this month, whale investors were given more individual stocks, while precious stocks became more accessible to smaller investors. Netflix is also moving to acquire Warner Bros., which could boost NFLX stock.
Turning to Wall Street, the analyst consensus rating for Netflix is a Strong Buy, based on 28 Buy, 7 Hold, and 1 Sell ratings over the past three months. The average price target for NFLX stock is $139.13, giving the stock a potential upside of 35.98%. Specifically, TD Cowen and Guggenheim have a buy rating and lead price target of $145.
