Netflix's password-sharing crackdown could fuel a $20 billion valuation surge, Bank of America says

• Netflix shares could climb 12% if the streaming giant's password-sharing crackdown proves a success, according to Bank of America.
• The crackdown "will drive upward estimate revisions across the Street," analysts said.

Netflix's war on password sharing is going better than expected – and that could fuel a major surge for the Big Tech stock, according to Bank of America.

The crackdown that the streaming giant launched last month "will drive upward estimate revisions across the Street," a team of analysts led by Jessica Reif Ehrlich wrote in a note to clients Tuesday.

"Supported by its world-class brand, leading global subscriber base, and position as an innovator, we believe Netflix is poised to outperform," they added.

The bank lifted its price target for Netflix shares from $410 to $490, citing evidence that the clampdown has been an early success.

If the stock were to hit $490, it'd be up 12% from the $436 level it traded at as of Tuesday's closing bell.

By Insider's calculations, those gains would add nearly $23 billion to the company's total market capitalization.

On May 23, Netflix shared its plan to reduce password sharing in the US, as part of an effort to boost its subscriber numbers after it suffered its first loss of account holders in over a decade in the first quarter of 2022.

The streaming giant said it would charge US subscribers an additional $8 to add another user living outside their household to their account.

The early signs suggest that the crackdown has provided the company with a much-needed boost.

Between May 23 and May 29, Netflix had its "four single largest days of US user acquisition" in at least four-and-a-half years, according to data from the analytics company Antenna.

As much as 60% of so-called "password-borrowers" electing to pay the $8 fee would generate nearly $2 billion worth of extra revenue for Netflix, according to Bank of America.

The Big Tech giant's stock has jumped 48% in 2023 – clawing back some of its losses from a dismal 2022, when it shed over two-fifths of its total market cap.

Read more: Sorry, but Netflix's password-sharing crackdown seems to be going really well so far