Netflix stock just hit an all-time high, with shares of the streaming giant soaring past their 2021 record intraday high of $701 to trade around $710 on Tuesday. This surge comes as investors applaud the company’s foray into live sports and the continued success of its ad-supported tier. In a blog post, Netflix revealed that it secured “a 150% plus increase in upfront ad sales commitments over 2023, in-line with our expectations.”
The success of Netflix’s ad partnerships can be attributed to upcoming movies and series like “Happy Gilmore 2” and “Squid Game 2,” as well as the recent acquisition of live sports content such as the NFL Christmas Day games and WWE Raw, which will debut in January 2024. Amy Reinhard, president of advertising at Netflix, stated, “Our advertising clients remain excited about our highly engaged audience and the variety and quality of our programming.”
As advertising adoption gains traction, Netflix is well-positioned to hike prices. The company last raised the price of its Standard plan in January 2022 to $15.49 from $13.99, and its Premium tier to $19.99 a month. In October, the cost of the Premium tier was increased to $22.99. However, the price of its ad-supported offering, introduced under two years ago, remains one of the cheapest among major streaming players at $6.99 a month.
Netflix has stated its goal to make ads a substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond. As a result, the company will phase out its lowest-priced ad-free streaming plan, making the $15.49 Standard plan its lowest-priced offering for ad-free experiences.
Analysts have suggested that the Standard plan could potentially be subject to price hikes later this year. Despite hitting a record high on Tuesday, Netflix’s shares experienced a mid-July sell-off following revenue guidance that missed Wall Street’s expectations for the current quarter. The stock had also been under pressure from a more recent sell-off in Big Tech, which has since recovered.
Overall, Netflix’s success in expanding its content offerings, increasing ad partnerships, and potentially raising prices indicates a positive outlook for the company’s future growth and profitability. Investors continue to show confidence in Netflix’s ability to innovate and adapt to the evolving streaming landscape, driving the stock to new heights.
