Netflix Stock Gets Upfront Optimism Boost From Key Ad Tier Updates, NFL

Surbhi Jain

13 May 2024 at 10:52 am·2-min read

Netflix Stock Gets Upfront Optimism Boost From Key Ad Tier Updates, NFL

Analysts are optimistic about Netflix Inc (NASDAQ:NFLX) as the streaming company gears up for its Upfront presentation on May 16.

JPMorgan analyst Doug Anmuth reiterated an Overweight rating on Netflix stock with a price target of $650, citing several factors driving the stock’s recent rebound.

Netflix Stock Rebound

Chart: Benzinga Pro

After initially dropping post-earnings on April 18, Netflix shares have rallied back to their pre-earnings price, outperforming the S&P 500, as represented by the iShares S&P 500 ETF (NYSE:SPY).

Anmuth believes this rebound is due to increased comfort with Netflix’s 2024 revenue outlook and its decision to no longer report subscribers starting in 2025.

He also pointed to the “recognition that NFLX is not subject to heavy AI-driven capex intensity like META, GOOGL, & AMZN Unlike some competitors,” as a factor driving this rebound.

Also Read: Microsoft, Alphabet And Meta’s Raised AI Capex Outlook Could Benefit These JPMorgan Stock Picks

Ad Tier Expectations

Anmuth expects the Upfront presentation to bring updates on several key areas.

One focus will be on the Ad tier, with expectations for an update on the 23 million+ ad tier monthly active users (MAUs). Conversations suggest investors are looking for 35-40 million+ ad tier MAUs, including the benefit of the T-Mobile bundle.

Ad tier subscriptions have grown significantly, with over 40% of sign-ups now opting for the ad-supported tier.

Advertising remains a key area of growth for Netflix, highlighted Anmuth, with the company expected to drive Ad tier growth through bundles, pricing changes, and marketing efforts.

Anmuth projects Ad tier subs to reach 28 million by the end of 2024 and 39 million by the end of 2025.

“Advertising remains a drag on ARM as monetization lags inventory & scale growth, but ad sales will build over time [and] Netflix expects the Ad tier to become a more meaningful revenue driver in 2025 & beyond,” he said.

Netflix’s Content Slate & Sports Strategy

Aside from ad tier updates, investors are also looking for news on Netflix’s content slate and sports strategy.

There are suggestions that Netflix could host two NFL games on Christmas later this year, potentially boosting the ad tier and promoting upcoming content.

Anmuth notes that Peacock’s NFL playoff game this past season reportedly cost around $110 million.

Overall, JPMorgan remains positive on Netflix shares, citing a bullish thesis including:

revenue growth acceleration,
operating margin expansion, and
multi-year free cash flow ramp.

Latest Ratings for NFLX

Date	Firm	Action	From	To
Mar 2022	Wedbush	Upgrades	Underperform	Neutral
Jan 2022	Citigroup	Upgrades	Neutral	Buy
Jan 2022	Rosenblatt	Maintains		Neutral

View More Analyst Ratings for NFLX

View the Latest Analyst Ratings

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This article Netflix Stock Gets Upfront Optimism Boost From Key Ad Tier Updates, NFL originally appeared on Benzinga.com

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Netflix Stock Rebound

Ad Tier Expectations

Netflix’s Content Slate & Sports Strategy

Latest Ratings for NFLX

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