Streaming player Netflix (NASDAQ:NFLX) is making changes to its advertising tie-up with tech company Microsoft (NASDAQ:MSFT). As part of this overhaul, Netflix is reducing its ad prices to boost its ad-tiered business, the Wall Street Journal reported. The rejig comes as the streamer’s ad-tiered plan has failed to impress the masses since its launch in November last year.
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Netflix’s ad-supported plan comes at a reduced membership rate of $6.99 per month. The company aimed to draw flocks of viewers to its cheaper plan, but as of June, the ad-tier segment represented barely 3.3% of its U.S. subscriber base (as per Antenna).
Moreover, the report highlighted that Netflix is unhappy with Microsoft’s soft selling of advertisements on its channel. To overcome the hiccup, Netflix is now negotiating deals with other advertisers who are willing to pay approximately $39 to $45 per 1,000 views, a lower rate than it charged previously.
Earning Q2 Snapshot
Last week, Netflix reported mixed Q2FY23 results, beating earnings but missing revenue expectations. The company’s Q3 guide also fell short of expectations. Even so, the streaming platform added 5.89 million subscribers in the quarter, bringing the global total to 238.39 million.
What is the Future of NFLX?
Following Netflix’s Q2 print, a slew of analysts raised the price target on NFLX stock. On TipRanks, out of the 24 top analysts who recently rated Netflix stock, 14 have given it a Buy, nine have given it a Hold, and one analyst has given it a Sell rating. Top Wall Street analysts are those awarded higher stars by the TipRanks Star Ranking System. This is based on an analyst’s success rate, average return per rating, and statistical significance (number of ratings).
Based on the top analysts’ views, NFLX has a Moderate Buy consensus rating. The average Netflix price forecast of $468.27 implies 10.8% upside potential from current levels. Meanwhile, NFLX stock is up 43.3% so far in 2023.
