The streaming giant Netflix (NASDAQ: NFLX) switched to an ad-supported model to bring back the lost luster of the title. As for the a WSJ report, Netflix expects to have over 40 million unique viewers by the end of 2023 on the ad-supported level of its streaming service. This preliminary forecast includes 13.3 million viewers from the United States.
Additionally, the streaming service provider aims to reach a unique worldwide audience of at least 4.4 million viewers by the end of 2022. Specifically, the company’s preliminary estimates presented to potential advertisers covered a dozen other markets such as Brazil, Mexico, Japan, United Kingdom, France, Germany, Korea, Spain, Italy, Australia and Canada.
Given the flexibility of subscription sharing, unique audiences are likely to outweigh subscribers for the ad-supported tier.
How is Netflix’s advertising strategy going?
Netflix is charging a premium for advertising as it has a subscriber base of 220 million. According to The Wall Street newspaper, the company proposed to charge approximately $ 65 for every 1,000 viewers. The streaming platform requires a one-year upfront commitment from ad buyers. Netflix also aims to maintain a higher $ 20 million cap on annual ad spend on its streaming platform.
Specifically, Netflix is speculated to be planning to roll out the ad-supported plan later this year.
Another report by Variety states that Netflix should charge between $ 7 and $ 9 per month for the ad-supported tier.
Is it worth investing in Netflix?
While the streaming pioneer’s advertising strategy has potential, investors can still wait on the sidelines before parking money in Netflix stock. According to TipRanks, Street is neutral to NFLX stocks, which have a Hold consensus score based on seven buys, 20 tricks, and five sells.
Additionally, hedge funds and retail investors seem concerned about NFLX stocks. Hedge funds sold 57,500 shares of NFLX in the last quarter. Retail investors have also reduced their portfolio holdings in Netflix shares by 1.6% over the past 30 days.
Meanwhile, financial bloggers look bullish on NFLX stocks. Financial bloggers’ views are 75% bullish on NFLX shares, above the industry average of 65%.
Finally, the NFLX average stock price target of $ 235.78 signals upside potential of 5.2% from its current level.
Bottom line: Netflix’s advertising strategy looks strong, results blurry
Netflix’s latest showings of its ad shopper material come as a hiatus after the company lost subscribers for two consecutive quarters. Shares of NFLX stock were up 2.8% on the following September 14th WSJthe report. However, it’s unclear whether Netflix will be able to make a successful landing with the ad-based plan offering.
Netflix is charging advertisers high premiums in the face of intensifying competition in the streaming market, which could negatively hurt the strategy’s positive output. Meanwhile, recent hires in the highest positions and encouraging details on ad features are slowly creating optimism among investors about the company’s efforts to rewrite its success story.
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