Sunday, May 19, 2024

Netflix Reveals Big Jump In Advertising Viewers, Sending These Stocks Surging

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Internet television network Netflix (NFLX) touted its rapidly expanding base of ad viewers at its upfront presentation to advertisers in New York City. Netflix stock was little changed, but ad tech stocks Magnite (MGNI) and Trade Desk (TTD) surged on the news.




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Late Wednesday, Netflix revealed that its ad-supported service tier now has 40 million global monthly active users, up from 5 million a year ago. Plus, over 40% of new signups are getting the ads plan in those markets where it is available.

Netflix also announced that it will launch an in-house advertising technology platform by the end of 2025, replacing its current ad tech partner Microsoft (MSFT).

“Bringing our ad tech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today,” Amy Reinhard, Netflix’s president of advertising, said at the upfront event.

This summer, Magnite, Trade Desk and Alphabet‘s (GOOGL) Google Display & Video 360 will join Microsoft as the main programmatic partners for advertisers on Netflix.

Netflix Gets Christmas NFL Games

Netflix also announced that it will stream two NFL games on Christmas Day this year. Plus, it will stream at least one Christmas Day game in 2025 and in 2026.

Netflix is paying the NFL about $75 million a game this year, the Wall Street Journal reported.

In midday trades on the stock market today, Netflix stock dipped a fraction to 613.10. Meanwhile, Magnite stock rocketed about 28% to 12.53. Trade Desk stock jumped 4.2% to 94.03. Both Magnite and Trade Desk hit buy points out of consolidation patterns on Thursday, according to IBD MarketSurge charts.

The addition of pro football games on Netflix shows the company’s continued interest in live sports and entertainment. Other live sports coming to Netflix include a boxing match between Mike Tyson and Jake Paul and the weekly pro wrestling show “Raw” from WWE.

“Along with the recent WWE deal, we believe the addition of NFL rights provide another lever to drive engagement, enhance pricing power and scale the company’s ad business,” UBS analyst John Hodulik said in a client note. He rates Netflix stock as buy with a price target of 685.

Netflix Stock Trading In Tight Pattern

Evercore ISI analyst Mark Mahaney said Netflix’s ad business is growing faster than expected.

“With Netflix now at 40 million active viewers of its ad-supported offering, we’re talking real scale,” he said in a client note. “The company is clearly on a path to significantly exceed 50 million (viewers) by the end of 2024. And based on our discussions with advertisers over the last year, it’s when Netflix crosses the 50 million threshold that it becomes a key part (almost a must-buy) of brand advertisers’ marketing budgets.”

Mahaney rates Netflix stock as outperform with a price target of 650.

Netflix stock has been trading in a tight pattern the last two weeks, MarketSurge charts show. It has an IBD Relative Strength Rating of 90 out 99. That means it has been outperforming 90% of all stocks over the past 12 months.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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