Netflix stock jumps 10% — and ads are a big reason why
Netflix Shares have roughly doubled in the past year, despite a High bar When the company’s market capitalization exceeds the competitors’ estimates for future growth Disney, Comcast, Warner Bros. DiscoveryAnd Paramount Global Combined. to meet expectationsThe company needs to deliver one of its priorities for 2025: sell more ads.
Recent signs are promising. Many of the 19 million subscribers Netflix added in the last three months of 2024 are opting to watch popular series. Squid Game, Bridgerton, And Nobody wants this. Cheap, ad-supported by the company Providing. On the earnings call following Netflix’s spectacular hit Tuesday, co-CEO and President Gregory Peters agreed With one analyst saying the company’s ad business growth is moving from “foot to foot.”
Ad revenue doubled this past year, and the company says it expects to repeat that growth in 2025. Those plans accounted for 55% of new enrollments in countries where they were available, including Canada, Mexico, Brazil, South Korea, and Japan. , Australia and most of Western Europe. Advertising plan membership grew 30% last quarter, on top of a 35% jump in Q3.
“While we have a lot of work to do, we feel the path is at least right for the next several years, and we’re confident we’ll continue to grow revenue at a strong pace and get a growing slice,” Peters said. More than $25 billion in (connected TV) advertising spending,” referring to devices like smart TVs that connect to the Internet and allow viewers to stream content and browse the web.
David Heger, senior analyst at Edward JonesAfter the end of the COVD-19 pandemic, the company began losing subscribers as people struggled with inflation and reduced overwatch activity. As the income increases, the company is widely publicized in the campaign Password sharing Blushing, he says the ad game could be different. Smart move. Attempts to attract budget-conscious customers could be especially important in emerging markets, he added.
“I don’t think they’re at the point where an ad-supported subscriber makes as much money as an ad-free subscriber,” Heger said. But you definitely want to get to that level.
Investors will be watching closely to see if they can continue to be the key growth drivers fueling the stock’s impressive returns of late.
Brian Mulberry, client portfolio manager at Zacks Investment Management, sees stress ahead. While Netflix continues to grow core subscriptions, it wants to focus on growing ad revenue from its cheaper plans as well as over-the-air. Live events Like the NFL games on Christmas Day and the two upcoming editions of the Women’s World Cup.