Netflix Shares have nearly doubled in the past year, setting a high bar For future growth as the company’s market capitalization surpasses the valuations of rivals Disney, Comcast, Warner Bros. DiscoveryAnd Paramount Global To meet the joint Rising expectationsThe company will have to deliver on one of its priorities for 2025 — selling more ads.
Recent signs are promising. In the last three months of 2024, many of Netflix’s record 19 million subscribers are binge-watching hit series such as Squid Game, Bridgerton, And Nobody wants that Through the company’s cheap, advertising-supported offer. On an earnings call after Netflix’s impressive defeated Tuesday, co-CEO and president Gregory Peters Agreed With one analyst saying the company’s ad business is growing from “crawl to walk.”
Advertising revenue doubled last year, he noted, and the company expects to repeat that growth in 2025. These plans accounted for 55% of new signups in countries where they were available, including Canada, Mexico, Brazil, South Korea, Japan. , Australia and most of Western Europe. Ad-plan memberships grew 30% last quarter on top of a 35% jump in Q3.
“While we have a lot of work to do,” Peters said, “we feel the path is at least fairly straight for the next several years, and we’re confident we can continue to grow revenue at a solid pace and Can earn a growing share of more than $25 billion [connected TV] ad spend,” referring to devices like smart TVs that connect to the Internet and allow viewers to stream content and browse the web.
David Hager, a senior analyst at Edward JonesIn 2022, management was credited with pushing the idea after the company began losing customers as people grappled with inflation and reduced viewing after the end of the COVID-19 pandemic. As a revenue boost from the company’s widely publicized crackdown on Password sharing The feds, he said, may prove to be another advertising game Wise move. He added that trying to woo budget-conscious customers could be especially meaningful in emerging markets.
“I don’t think they’re at the point yet where an ad-supported customer generates as much revenue as an ad-free customer,” Hager said. “But they certainly want to get to that point.”
Investors will be watching closely to see if advertising can become the key growth driver powering the stock’s impressive returns of late.
Brian Mulberry, a client portfolio manager at Zacks Investment Management, sees tension ahead. While Netflix continues to grow its premium subscriptions, it also wants to focus on growing ad revenue from streaming alongside cheaper plans. Live event Like the NFL games on Christmas Day and the two upcoming editions of the Women’s World Cup.
