Netflix's stock slipped after a strong quarter due to valuation concerns and a Brazilian tax expense that impacted earnings, despite 17.2% revenue growth and a growing ad-supported business. While the company's fundamentals remain solid, its high valuation suggests caution for new investors considering buying the dip, though existing shareholders may continue to hold given the company's growth prospects.
Apple TV+ has increased its subscription price to $12.99/month, which may lead to the launch of an ad-supported tier around $6.99/month, similar to strategies used by competitors like Disney+. This move could diversify revenue streams and attract more budget-conscious consumers.
Netflix, once synonymous with streaming, has undergone significant changes in response to a dwindling subscriber base, including the launch of a cheaper, ad-supported tier that has garnered 5 million subscribers in six months. The company has also cracked down on password sharing and implemented multiple price hikes, while making significant investments in advertising and content, such as a $5 billion deal for WWE Monday Night Raw. These changes reflect a shift in Netflix's strategy to prioritize profitability and stay ahead in an increasingly competitive streaming industry.
Netflix's stock soared 14% after reporting strong Q4 earnings, surpassing 13 million subscribers and beating revenue estimates. Wall Street analysts raised price targets, but some cautioned against the stock's overblown valuation and potential subscriber slowdown. The newly announced WWE deal was seen as a growth opportunity, and the ad-supported tier showed promising growth, with ad-tier memberships increasing by nearly 70% quarter over quarter. Despite concerns, analysts still see major growth potential for Netflix in 2024 and beyond.
Netflix plans to retire its 'Basic' ad-free tier and phase it out for existing subscribers, instead offering a Standard with Ads plan with more streams and higher resolution at a lower effective price. The company reported significant growth in ad-tier membership and intends to drive further growth through potential price hikes and a crackdown on password sharing, while also investing in TV, film, game content, and live events like the recently announced WWE deal.
Netflix reports strong growth in its ad-supported tier, with 40% of new signups opting for the ad tier. The company plans to retire its Basic membership tier and hints at potential price increases to reflect improvements in its service. The ad tier, which has 23 million monthly active users in 12 countries, is expected to continue growing, and Netflix's advertising team will have more inventory with the addition of WWE's Monday Night Raw in 2025.
Netflix's fourth-quarter subscriber additions surged to 13.12 million, surpassing its own forecast, while revenue beat Wall Street estimates at $8.83 billion. The company reported strong operating margins and free cash flow, and guided to first quarter revenue of $9.24 billion. Netflix also announced a new partnership with WWE to bring Raw to its streaming service, marking its first big venture into live sports entertainment. Additionally, Netflix film chief Scott Stuber will exit his position in March.
Netflix reported mixed second-quarter earnings, with revenue slightly missing estimates despite new initiatives such as a crackdown on password sharing and the launch of an ad-supported tier. The company's profitability metrics, including operating margin and free cash flow, exceeded expectations. However, Netflix's third-quarter revenue guidance fell below expectations, leading to a dip in its stock price. The company also quietly removed its lowest-priced ad-free streaming plan in the US and plans to roll out paid sharing to more countries. Netflix is considered well-positioned amid the ongoing Hollywood strikes, according to a report by Moody's.
Amazon is reportedly in talks to launch an ad-supported tier of Prime Video, which could include showing more ads to existing Prime subscribers and offering an "option to pay more for an ad-free alternative and other features." The ad breaks will reportedly be "short," but there's no word on how much the tier will cost. Amazon is already deep into the advertising industry, which grew to $9.5 billion in revenue according to its most recent earnings report. An ad-supported tier could help Amazon bring in more money as it deals with layoffs and uncertain economic conditions.
Amazon is planning to launch an ad-supported tier of its Prime Video streaming service to generate more revenue from entertainment and build its ad business. The move would help Amazon cover the costs of creating movies and programs such as 'The Marvelous Mrs. Maisel.'
Netflix's stock rose by almost 10% after the company revealed that its ad-supported tier had 5 million monthly active users and that 25% of new subscribers were signing up for the cheaper option. The company launched the ad-based option in late 2022, following quarters of stagnating subscriber growth. Netflix's ad-tier costs $6.99 a month and features commercials of 15 or 30 seconds in length before and during content. The company is likely to offer multiple subscription plans with ads in the future.
Netflix's ad-supported tier, "Basic with Ads," has 5 million global monthly active users, according to the company's virtual upfronts presentation. The ad-based plan complements Netflix's existing ad-free offerings and costs $6.99 a month in the US. The company has yet to reveal actual subscriber figures for the ad tier or how much revenue it's generated so far. Netflix currently boasts 232.5 million global subscribers, but the company said ad-based users have more than doubled since early 2023, with more than a quarter of Netflix sign-ups now choosing the ads plan in countries where it's available.
Netflix has delayed its plans to crack down on password sharing in the US until sometime before July. The company has already implemented anti-password sharing rules in Canada, New Zealand, Portugal, and Spain, and is pleased with the results. Netflix is also making more money per subscriber with its $6.99 per month ad-supported tier when compared to its cheapest ad-free tier. The company added 1.75 million subscribers in the first quarter of 2023, making for a total of 232.5 million globally. Netflix is bringing new perks to the ad-supported tier starting with Canada and Spain, including 1080p video quality instead of 720p and the ability to watch two streams at once.
Netflix missed subscriber growth forecasts for Q1, reporting 1.75 million net additions versus the expected 2.3 million. However, the company beat analyst expectations on earnings per share. Netflix also revealed plans for a broad rollout of its password-sharing crackdown, which will include the U.S. in Q2. The company also provided updates on its ad-supported tier, reporting above-expectation engagement and announcing plans to upgrade the ads experience with more streams and improved video quality.
Netflix is set to report its Q1 earnings after the bell on Tuesday, with investors closely watching subscriber numbers, particularly for its ad-supported tier. The company will no longer provide guidance for subscribers, but will still report total user count. Wall Street analysts expect earnings per share of $2.86 and revenue of $8.18 billion. Netflix's ad-supported tier and crackdown on password sharing are expected to be key focuses for investors. The company has yet to provide password-sharing guidance for the U.S., although it is expected to do so this year.
