Netflix stock jumps 10% on signs that its new ad-based subscription plan is booming
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- Netflix told advertising executives that its new ad-based plan has 5 million active users.
- The ads subscriber base has "more than doubled" since early this year, the company said Wednesday.
- Shares jumped as much as 10% on Thursday, hitting their highest level since March 2022.
Netflix stock leapt Thursday morning after the streaming service reported promising metrics from its recently debuted ad-supported plan.
Shares jumped as much as 10%, hitting their highest level since March 2022.
Launched six months ago, Netflix's new tier offers subscriptions at a cheaper price, but includes ad breaks during streaming.
On Wednesday, the company presented advertising executives at the industry's so-called upfronts with the first insights into the new tier, disclosing that it had 5 million monthly active users.
That suggests considerable growth in a short-span of time. In March, Bloomberg reported that the $7-per-month ad option had 1 million monthly active users after its first two months.
For its part, Netflix's upfront presentation also said that its base of ad subscribers had "more than doubled" since 2023's start.
Still, the company didn't disclose actual subscriber figures or revenue from the new tier.
Because monthly active users can include several people using the same subscription, analysts at Evercore estimated that the 5 million MAUs Netflix reported translates to 2 million-3 million subscription accounts.
The platform ended the first quarter with 232.5 million global subscribers overall.
Despite earlier fears that the ad-tier would prompt users to downgrade, Netflix's presentation indicated a quarter of new sign ups chose the ad-tier offer.
Meanwhile, Netflix's future performance will be under heightened scrutiny in the second quarter, when the platform plans to roll out its password sharing crackdown. The firm said it would expect some near-term subscriber loss, but expects users who used to borrow accounts boost subscriptions in the long run.
Contributer : Business Insider https://ift.tt/uY8OfAo
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Friday, May 19, 2023
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