Netflix is ​​down 50% from its peak. Time to buy? | Daily News Byte


Netflix (NFLX 3.39%) 2022 active start; The price of the streaming company is hovering around $590, thanks in part to the rapid increase in subscriptions during the worst months of the pandemic. But only a few weeks later, investors began to leave the company, and the move turned into a trip when the streamer announced in April 2022 that the writers had disappeared​​​​ name for the first time in over a year.

As the year draws to a close, Netflix’s stock is down about 50%, trading at around $290. But the streamer is looking for some interesting plans that could show promise in 2023 and beyond.

It was a turbulent start for his campaign

Netflix has launched a $6.99 per month ad-supported service starting November 2022. Dubbed Basics with ads, the plan appears to be targeting people who don’t mind marketing messages whenever possible. they have access to most of Netflix’s library of shows and movies. And according to some reports, the streamer expects to attract around 40 million customers by the end of 2023.

Speaking in The New York Times DealBook Summit a few weeks after the announcement of sponsored advertising, Netflix co-CEO Reed Hastings expressed regret about his initial opposition to that product. “[Disney‘s] Hulu has definitely proven that you can do it [ad-supported streaming] at scale and offer customers lower prices,” said Hastings. “I think we turned it around a few years ago, but we’ll catch up, and in a few years we won’t remember when we started.”

While Hastings sounds optimistic about the future of Netflix’s streaming service, there are signs of a humble beginning. According to multiple Digiday sources, Basic with Ads has reached about 80% of the target audience. Because of this, Netflix is ​​returning payments to its advertising partners for unsold inventory.

One skill player

While Basic with Ads is less than a good start, Netflix has another part of its business that it believes will generate growth over time: video games.

Netflix has acquired several video game companies in the past 15 months, including Night School Studio, maker of the popular title Oxenfree. The company has also released many games of IOS and Android, offering them as exclusive for its video streaming authors.

Smartphone and tablet gaming is estimated to be worth $152.5 billion this year alone, so it makes sense that Netflix is ​​targeting that segment first. But as his search for ad-supported content, the small business is now known. A report published earlier this year found that less than 1% of Netflix subscribers downloaded its mobile games.

Despite Netflix’s ambitions as a gaming company, the streamer is confident it can do it. “[W]believe that the future of television, movies, and games is streaming,” said co-CEO Ted Sarandos during the company’s third quarter 2022 conference call. “And we can do including delivery of shows, movies, and games. that people love.”

Related to existing businesses

By moving into ad-supported content and video games, Netflix is ​​pleasing consumers while also helping to secure its user base. Basic with Ads can act as an on-ramp for serious customers, while mobile games will be a valuable addition.

But if subscribers continue to ignore these offers, it’s fair to question whether any of these strategies will work. Or, how much does Netflix have to spend on marketing to increase interest in them?

For investors considering whether to buy Netflix stock at its current price, the state of its ad-supported content strategy and the favorable response to its video games are reasons to hold. their fire. But considering the streamer’s history of building new businesses from scratch, it might be worth not betting against him. After all, when Netflix launched in 2002, it made money by renting DVDs to customers by mail order.

Tom Wilton has had business dealings with Netflix but has no position in any of the aforementioned stocks. The Motley Fool has ratings and recommends Netflix, the New York Times, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, short January 2023 $34 calls on New York Times, and short January 2024 $155 calls on Walt Disney. The Motley Fool has an advertising policy.


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