🍿 REVIEWS News – Paris/France.
The American giant Streaming Netflix (WKN: 552484) has had a choppy few months. Subscriber numbers fell in the past two quarters for the first time in more than a decade and 150 employees were laid off. Walt Disney, on the other hand, was able to further increase the number of users of its Streaming and surpassed Netflix for the first time in terms of user numbers. Netflix's stock price has fallen 75% from its all-time high in the fall of 2021. After a slight rally, the price is still 68% below today's high (as of 28/ 08/22, applies to all data). But two pieces of news from last weekend make it clear to me that all is well at Netflix and that this price reaction may be overdone.
1. Netflix dominates the current hits list in Streaming
The market research institute Nielsen constantly analyzes the programs that American consumers watch on television or via various Streaming. Over the past month, the Streaming as a whole surpassed linear television for the first time. Within the Streaming, Netflix topped the list of most-watched programs for the past week under review.
The ten most-watched shows all come from Netflix. Netflix also holds the top five spots in the self-produced series subcategory. When it comes to most-watched movies, five of the six most popular movies come from Netflix.
Even though this is only a weekly snippet, I think it clearly illustrates Netflix's strong market position in the important US market. The company has huge amounts of data on what people would like to see. The range of self-produced programs is extremely wide, spending around US$17 billion a year guarantees constantly new content. If you look at not only the number of subscribers, but also the market share and the most popular shows, you can see that Netflix is still the market leader and is expanding that position.
2. Ad-supported subscription prices are leaking
And that development could get a boost in early 2023 – when Netflix starts offering subscription models with advertising. Preparations for this are in full swing. Netflix works with Microsoft together to develop the partially ad-supported version. Users can then – as before – watch Netflix completely ad-free, or in exchange for a lower subscription price, have advertising shown from time to time.
Pricing details were announced by Bloomberg over the weekend. This would be between $7 and $9 in the US, about half the current price of a standard subscription of $15,50. Netflix could thus convince more price-sensitive potential subscribers and thus further increase the number of long-term subscribers, precisely because the Netflix service is rather expensive compared to competitors like Disney+.
I also see this news as positive. With this price, Netflix can compete with Disney+ (the ad-supported version would cost $7,99) and other services and win over potential price-sensitive subscribers. This could bring a further increase in the number of subscribers, especially in low-income countries.
Netflix therefore proves that it can still reinvent itself today. I think the company is capable of continued long-term growth and I find the P/E of 19 rather cheap.
Netflix Stock: 2 interesting articles first appeared on The Motley Fool Germany.
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Hendrik Vanheiden owns shares of Walt Disney, Netflix and Microsoft. The Motley Fool owns shares and recommends Microsoft, Netflix and Walt Disney and recommends the following options: $145 long call in January 2024 on Walt Disney and $155 short call in January 2024 on Walt Disney.
Motley Fool Germany 2022
SOURCE: Reviews News
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