April 2, 2023
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Netflix Rally on “Basic with ads” Announcement

NFLX Netflix

Netflix posted strong gains today after the announcement earlier that its new ad-supported service, “Basic with ads”, will start on November 3 in the U.S. for $6.99 per month.

Viewers who will subscribe to the ad-supported service will watch four to five minutes of advertisement per hour; every ad will run for 15 seconds or 30 seconds. Subscribers would have the option to download movies and TV series. Netflix’s CEO Greg Peters said that 5% to 10% of Netflix’s movie catalogue would not be available to “Basic with ads” users. The company said that has sold out its entire ad inventory.

The new tier will cut the subscription cost by half at $6.99 per month which is cheaper than its rivals (Disney+, Hulu, HBO Max).

Netflix subscription prices now are:  $15.49 standard without ads – $9.99 basic without ads and $6.99 basic with ads.  

Netflix turned to ad content as the subscriber base flattened in the last months while in 2022 is losing subscribers. NFLX has 221 million around the world and expects it will get three dollars per viewer in ad revenue.

In Q2 NFLX revenue increased 9% (YOY), supported by a 6% and 2% increase in average paid memberships (APM) and Average Revenue per Membership (ARM). Excluding the impact of foreign exchange, the Average Revenue per Membership rose almost 7% (YOY). Earnings per share were $3.20 vs. $2.97 a year ago beating the company’s guidance of $3.00 due to a $305 million non-cash unrealized gain from Forex.

Netflix will report its 3Q 2022 results and outlook on Tuesday, October 18, 2022, at 1:00 p.m.

Netflix Technical Analysis

Netflix (NFLX) stock has lost over 61% since the beginning of 2022 with a market capitalization of $98.22 billion.

NFLX stock price has regained some positive momentum today after the price managed to rebound strongly from the 100-day moving average which has proven very strong support since late August.

Bulls stopped today just at the 50-day moving average around 232.77. In case of more buying interest above the 50-day moving average, the next resistance stands at 237.51 the high from October 7.   

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