Streaming giant Netflix (NASDAQ:NFLX) has been undergoing a lot of changes lately, and some didn’t look like they’d work, like the password-sharing crackdown. However, all of that change seems to have been justified as Netflix emerged—successfully—from its first ad upfront presentation, causing shares to jump 9% at the time of writing.
Netflix actually needed an upfront this year—an “upfront” is basically a dog-and-pony show where networks try to land advertising deals for the upcoming new season of programming—thanks to its recently-launched ad-supported tier of service. With around five million global monthly active users in the first six months, it’s clear there’s support for that ad-supported tier. Now, Netflix is out to find the advertisers who will get to hawk their products in all that open space on the schedule.
Netflix management has maintained its previously-announced goal of $3 billion from the ad-supported tier, or roughly 10% of its total revenue. That’s going to take quite a few advertisers getting involved. But with around five million eyeballs and counting going into that ad-supported tier, that’s quite a pot of potential customers at stake. By way of comparison, Nielsen ratings for the week of April 24 noted that the top-viewed program that week was “Carol Burnett: 90 Years of Laughter + Love” with all of 7,597,000 viewers, or pretty close to a sixth of Netflix’s total pot.
Currently, Netflix stock is considered a Moderate Buy by analyst consensus, backed up by 18 Buy, 13 Hold, and two Sell ratings. However, with an average price target of $368.60, it also comes with 0.68% downside risk.
