The actions of the streaming platform Netflix have rebounded 29.28% since it announced a new, cheaper plan with ads, which went from being the company that lost the most in the first half of the year within the S&P 500to be one of the most recovered in the second half of 2022.
Before the new “basic plan with ads“, the actions of Netflix they were listed at $220.87 each; they currently sell for $285.74.
Kevin Ortiz, independent analyst of the technology sector, assured that the recovery in the price of Netflix It is due to the “change in strategy that is being sought, where a lower cost service that includes ads is added, in order to increase its user base and thus be one of the leaders in the sector.”
Jacobo Rodríguez, director of analysis at Black Wallstreet Capital (BW Capital), added that the shares of Netflix They have been supported by the new ad-supported subscription plan, which is “expected to boost their revenue” from ad sales.
The “basic with ads” plan is available from November 3 in 12 countries (including Mexico), at a lower cost than the three plans that the company already has. In Mexico, the monthly rate for this plan will be 99 pesos per month.
The new service will have an average of 4-5 minutes of advertising for every hour of content. Each ad will last from 15 to 30 seconds and will be broadcast before and during the series or movies.
The rebound due to the new service of Netflix has helped the company to be one of the ones that has risen the most within the S&P 500 during the second half of the year, after having led the losses in the index in the first half.
Since June 30, the shares of Netflix They have risen 63.29%, making it the seventh company that advances the most in the period of the 500 that make up the stock index.
José Luis de la Rosa, general director of Quant Dynamics, assured that the company has also been boosted in the second half of the year by the recovery in the number of subscribers in the third quarter of the year.
From July to September, Netflix added 2.41 million subscribers for a total of 223.09 million at the end of said period, this after having registered a loss of users in the two previous quarters.
Despite the recovery, the company streaming it still accumulates a negative annual return of 52.60%, for a loss in market value of 140.390 million dollars, given the greater competition with the emergence of new platforms and the reduction in the consumption of streaming services.
caution for 2023
Analysts noted that the outlook for Netflix to 2023 is uncertain, as the company will continue to face challenges such as high costs and increased competition in the streaming sector.
Companies in the sector face various challenges where the high costs of content production and the high level of competition in it stand out. I believe that investing in the sector would be looking for good returns and long-term results, since companies expect to start benefiting from these investments after 2023,” said Kevin Ortiz.
José Luis de la Rosa mentioned that “the outlook remains negative and would extend throughout 2023, because the United States is experiencing a wave of massive layoffs, and it is expected that a large percentage of the unemployed will cancel their streaming service to save expenses, plus the recession factor that is expected to deepen over the next year”.
For his part, Jacobo Rodríguez said that despite the losses he has suffered this year, the stock is still “a bit expensive” with an enterprise value-EBITDA (VE-EBITDA) multiple above the market average.
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