According to projections provided by JPMorgan, Netflix stock is poised to bring in significant sums of money over the succeeding several years due to the debut of its first tier, and advertisements fund that.
Projected Netflix Stock Revenue
In a new research note published on Monday, analyst Doug Anmuth projected that Netflix stock may attract 7.5 million customers to its ad-supported tier in the United States and Canada by 2023. That factor alone is expected to contribute to the segment’s advertising sales reaching $600 million in 2023. Anmuth anticipates that those figures will increase by the year 2026 as a result of Netflix Inc’s (NASDAQ:NFLX) improved ability to sell advertisements.
Anmuth forecasts that by 2026, the United States and Canada region of Netflix will have 22 million users and generate $2.65 billion in advertising revenue.
The stock has received significant support over the past few months from optimism on Wall Street surrounding the potential financial effect of an upcoming ad tier from Netflix. Compared to the S&P 500’s 4% decrease in value during the same period, shares of the streaming behemoth have increased by 19%.
According to Anmuth, “with Netflix’s lately reduced sub growth, advertising is important to re-accelerating revenue, growing Netflix’s SAM [addressable subscription market], and delivering higher profitability.”
“The narrative of Netflix has moved from little or no growth in subscribers on the existing business to advertising and paid to share coming in 2023,”
According to Anmuth, the first half of 2022 has not been typical of Netflix stock, which is one of the reasons why the company’s stock has dropped by 63% so far this year.
As a result of the slowdown in the economy and consumers cutting down on their spending, the firm lost more than one million paying members in the first two quarters of the year. The fact that people have been using their mobile devices more since the COVID-19 outbreak has harmed Netflix subscription patterns, as has the proliferation of competitive streaming platforms like Disney and Paramount.
According to Cowen analyst John Blackledge, there is a genuine opportunity for Netflix to contribute substantially to its bottom line by providing customers with a price tier funded by advertisements. As a result, Netflix stock has started to show signs of life again.
Featured Image: Megapixl © Timonschneider
Author Valerie Remorosa 
