Netflix Ad Tier Gains Traction: What's Going On With Shares Today?

Netflix Inc. NFLX shares opened at $649.79 and quickly traded lower by 1.5% on Wednesday.

The Los Gatos, California-based entertainment company is projected to report the smallest subscriber growth numbers for its streaming platform in five quarters for April-June. Significant gains have been made from its crackdown on password sharing, plus a shift in attention to summer sporting events, including the Euro soccer tournament.

According to LSEG data, Netflix added an estimated 4.82 million subscribers in the second quarter. While that’s slower growth, the new ad-supported tier has shown revenue growth.

Reuters reported that ad income is expected to more than double in the June quarter. The company’s revenue is anticipated to have increased by 16.4% to $9.53 billion, the fastest growth since Q2 2021.

Shows like “Bridgerton” and the limited series, “Baby Reindeer,” topped viewership charts in the second quarter, based on Nielsen data.

However, seasonal factors, including increased travel and the upcoming Olympic Games, are likely to impact viewership across Netflix and its competitors like Walt Disney Co’s DIS Disney+.

Also Read: Netflix, Disney Challenge Canadian Content Fee In Court: Report

Netflix’s ad-supported tier, introduced in May, has gained traction, reaching 40 million monthly active users worldwide and accounting for 40% of all sign-ups in available markets, up from 23 million in January.

The change has been well-received by investors, with Netflix shares rising nearly 35% year-to-date, outperforming the S&P 500 index’s approximate 19% gain.

To further expand, Netflix has formed bundling partnerships with companies like Comcast Corp. CMCSA and is increasingly hosting live content, such as streaming two National Football League games on Christmas Day.

The company also plans to build an in-house ad technology platform to enhance ad sales and performance measurement, transitioning from its reliance on Microsoft Corp MSFT for the ad tier infrastructure.

Netflix stock gained over 45% in the last 12 months. Investors can gain exposure to the stock via Invesco Next Gen Media And Gaming ETF GGME and REX FANG & Innovation Equity Premium Income ETF FEPI.

Price Action: NFLX shares are trading lower by 0.63% at $652.17 in premarket at last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.