Netflix stock (NFLX) is at a 7-month high after three straight sessions of gains, buoyed by bullish investor sentiment surrounding the streaming platform’s newly launched ad-supported tier.
Shares of the media giant, down roughly 50% since the start of the year, have climbed nearly 60% over the past six months. The stock rose about 3% in premarket trading on Tuesday.
The ad plan, dubbed “Basic with Ads,” rolled out on November 3 with a price tag of $6.99 a month in the U.S. — just below Disney’s ad-based price point of $7.99 (which will roll out on December 8.)
“It is absolutely a pivotal moment for the industry,” Kevin Krim, CEO of advertising measurement platform EDO, previously told Yahoo Finance, citing Amazon’s (AMZN) Thursday Night Football as another watershed moment when streaming, subscription, and ad-supported went to the masses.
Looking back, the executive explained, this “will be the moment where the vast majority of Americans became crystal clear that there’s going to be a new way to get the must-watch TV that they care about — and it’s going to be through a subscription-based and an ad-supported business model.”
Netflix added 2.41 million net subscriber additions in the third quarter— crushing estimates of 1 million. The results marked the first time this year that the company has added subscribers, which mostly came from outside of the United States.
In the first and second quarters, Netflix lost 200,000 and 970,000 subscribers, respectively. The company said it will stop giving guidance on paid memberships moving forward due to its introduction of new revenue streams. For now, though, Netflix estimated an addition of 4.5 million subscribers next quarter (above prior forecasts of 3.9 million.)
