Netflix Shares Rally as Ad-Supported Tiers Drive Growth Amid Q3 Earnings
After a strong set of third-quarter earnings and numerous adjustments to Wall Street price targets for the streaming media giant, Netflix’s shares surged higher into Friday trading, recording their largest one-day increase in a year. After cracking down on password sharing last year, Netflix is aiming to increase its share of revenue from ad-supported tiers on its platform. Netflix and Alphabet-owned YouTube generate more streaming minutes than all of their big competitors combined.
Netflix Reports $9.83 Billion in Q3 Revenue, Focus Shifts to Ad-Supported Growth
With less expensive options to Netflix‘s ad-free service, the decision was intended to prevent consumers from switching to other platforms. It has also allowed the company to maintain growing its paid membership base and open up new revenue streams from international advertising markets. The rate of those subscriber increases is slowing down, though, and Netflix has announced that it will stop disclosing information about the additions as early as next year. The increase in income in its ad-supported tiers, profit margins linked to its overall platform sales, and the funds it invests in new technology and content are now the main priorities for investors.
In addition to posting better-than-expected third-quarter revenues of $9.83 billion, a 15.1% increase from the same time last year, the Los Gatos, California-based company topped Wall Street’s profit projection with a bottom line of $5.40 per share. The return of the popular South Korean drama Squid Game and new live sports offerings will help Netflix’s membership growth over the last three months of the year grow even faster than it did during the third quarter, according to the company’s bullish theory.
We are in the subscription and entertainment business. And you can see in our results it’s a pretty good business, and it appeals to a very large segment of consumers and fans. Our top 10 films that premier on Netflix all have over 100 million views, among the most-watched films in the world,
Co-CEO Ted Sarandos
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