Netflix stands to haul in big bucks over the next few years from the launch of its first ad-supported tier, estimates JPMorgan.
Yahoo! Finance reports Analyst Doug Anmuth estimated in a new note on Monday Netflix could drive 7.5 million subscribers to its ad-supported tier in its US/Canada segment in 2023. That alone will help drive $600 million in advertising sales in 2023 for the segment. Anmuth expects those numbers to swell by 2026 as Netflix's execution on selling ads improves.
By 2026, Anmuth thinks Netflix's US/Canada segment will boast 22 million subscribers and drive $2.65 billion in advertising sales.
Optimism on Wall Street regarding the financial impact of Netflix's looming ad-tier has greatly supported the stock in recent months. Shares of the streaming giant are up 19% in the past three months, out-performing the S&P 500's 4% drop.
Given Netflix's recently muted sub growth, advertising is critical to re-accelerating revenue, expanding Netflix's SAM [subscription addressable market], and driving greater profitability," explained Anmuth."The Netflix narrative has shifted from slow/no sub growth on the current business to advertising and paid sharing coming in 2023."
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