MarketsSep 26, 2022
The near-launch of Netflix’s ad product has investors divided over its future
Streaming Shift
Victor Lei
Discover
The launch of Netflix’s ad subscription tier is approaching — expected to arrive in November. Investors are closely watching for any data they can to judge Netflix’s most important product launch in years.
Netflix (NASDAQ:NFLX) has fallen 63% this year — making it one of the worst-performing stocks on the Nasdaq-100. But has risen nearly 35% from its 52-week lows — burning many who bet against the stock.
Now, the future of Netflix rests on the success of its upcoming ad product — which has analysts divided over its potential.
Here’s how the ad product is expected to look:
Netflix is also charging advertisers $60-65 to reach 1,000 people (CPM) — nearly double what other streamers are asking.
The bear: Benchmark analyst Matthew Harrigan — who has a $157 price target (30% downside) — thinks prices are too high and should be lower than other platforms (Barron’s). Netflix is also launching an ad product in a weak advertising market.
The years of big-budget content spending may be over. An economic slowdown has made studios more cost-conscious, with investors demanding a path to profitability.
It’s pure chaos in the entertainment industry. Projects are being canceled, budgets are being cut and studios are prioritizing safer projects.
Netflix, like many others, had to find ways to cut costs:
That’s what any data is at this time.
Several analysts have upgraded this month — seeing the ad product as a catalyst. Still, over 50% of analysts have a “hold” rating on — Wall Street lingo for “don’t sell or buy.”
*Cheers for Netflix* — because imagine having to say MATANA stocks…
