Shares in Netflix (NFLX) stock fell on Thursday after reports came out that the company sold one of its video game studios. Netflix began adding video games to its streaming apps in the last few years, adding to its wide arsenal of films and television shows, including original programming. Spry Fox, the developer behind Cozy Grove and Alphabear, has reportedly been sold back to the studio’s founders as it continues to work on its next game, Spirit Crossing.
The news brought on concerns that Netflix is stepping away from its gaming division, which sent the stock down a fraction of a percent. Its stock is down 5% in the past month, but remains a top performer this year with an over 16% gain since January. Investor reaction has been cautious, with Netflix shares dropping to a seven-month low as concerns about integration challenges and debt load grow.
On the other hand, most experts aren’t too concerned about the dip or the studio sale. Instead of focusing on original games for its service, Netflix has shifted its focus to creating games based on its own properties or other well-established series. The streaming service has also found that social games perform well on its platform; thus, the need for the Spry Fox studio was lacking.
Furthermore, Netflix (NFLX) remains one of the best performers amongst entertainment stocks on the US stock market. The streaming giant announced another 10-for-1 stock split earlier this month, making the valuable stock more attainable for smaller investors while awarding whale investors with more individual shares. Netflix is also in the running to buy Warner Bros, a move that could send NFLX shares higher.
Turning to Wall Street, the analysts’ consensus rating for Netflix is Strong Buy, based on 28 Buy, seven Hold, and a single Sell rating over the past three months. NFLX stock price boasts an average target of $139.13, representing a potential 35.98% upside for the shares. Specifically, TD Cowen and Guggenheim are leading with a Buy rating and price target of $145.