Netflix Inc. is still in a slump as it struggles to come anywhere close to its momentum from the early days of the pandemic, but some Wall Street analysts are still hopeful that a brighter future lies ahead for the streaming giant.


are off about 4% in Wednesday morning trading after the company reported its worst quarter of subscriber additions on record, as expected, and then issued a forecast suggesting that the current quarter is likely to be only a little better.

Some analysts urged investors to keep the faith, betting that the fourth quarter could bring more encouraging trends.

“While management has guided to a modest [subscriber acceleration] from Q2 to Q3, we think a record quarter for content in Q4 will drive a steeper [subscriber] curve and recatalyze the bull case,” wrote Wells Fargo analyst Steven Cahall, who has an overweight rating and $700 target price on the shares.

Bernstein’s Todd Juenger wrote that the latest report did little to address the key questions about the Netflix narrative, namely whether the company can return to a more normal pace of subscriber growth, which he pegs at about 25 million to 30 million a year.

“We believe the key near-term question hinges on Q4,” Juenger wrote in note titled: “Sitting, waiting, wishing.” If the company meets its third-quarter forecast, it will have averaged 27 million net additions a year over the past 24 months and would need 8 million to 9 million in the fourth quarter to stay on that pace, according to Juenger, who projects 9 million in his base-case scenario.

Netflix also has some new opportunities ahead of it, including a planned push into video games. While the company hasn’t played into the gaming space before, Juenger came out of Netflix’s earnings call “feeling comfortable that the investment in this ‘new content genre’ is not dissimilar to the daily choice Netflix faces regarding making an additional movie/series.”

In other words, the company will be able to make bets on a wider variety of content with the same goal of maximizing its return on investment in the form of subscriber engagement and brand-building efforts.

Juenger has an outperform rating on the stock and a $617 target.

See more: Netflix lays out mobile games plan that could set a collision course with Apple

Canaccord Genuity analysts Maria Ripps and Michael Graham were also intrigued by the company’s discussion of gaming, calling it “perhaps [the] most interesting” part of Netflix’s earnings interview.

“This move into the rapidly growing gaming space should drive engagement and enhance the value proposition for existing subscribers while also helping the company with user acquisition among a younger demographic,” they wrote, while reiterating a buy rating and $650 price target on Netflix shares.

Others cautioned that Netflix is still in the very early days of that move. “We believe that incremental revenue/benefit from expansion into gaming will be limited given Netflix’s seemingly small near-term ambitions and the highly competitive nature of the category,” wrote Bank of America’s Nat Schindler, who has a buy rating and $680 price target on Netflix shares.

Barclays analyst Kannan Venkateshwar also pointed out that Netflix’s investment in gaming seems small thus far.

“We believe Netflix’s expansion into videogaming has the potential to reshape future entertainment forms…but this process is likely to take time and could be capital intensive,” he wrote, while reiterating a neutral rating. “This is why the core revenue growth/margin expansion story needs to remain intact.”

Netflix shares are essentially flat over a three-month span as the S&P 500

has risen about 4%.

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