Netflix stock dipped 1% to close the week at $230 a share as debate continued on Wall Street about the financial impact of the company’s embrace of advertising
Basic with Ads, the new subscription tier with four to five minutes of ads per hour of programming, will debut in early November in the U.S. and 11 other countries,Two senior executives, COO Greg Peters and global ad chief Jeremi Gorman, presided over a 40-minute demonstration for the press, an event that was later posted to Netflix’s public newsroom, prompting a wave of reactions from Wall Street analysts.
Michael Nathanson of MoffettNathanson issued a follow-up note to his recent report on Netflix’s ad plan, in order to review how accurately the firm had predicted yesterday’s news. While there were many accurate forecasts, Nathanson conceded he had expected the U.S. price to be $7.99, in line with Disney’s soon-to-launch ad tier.
Guggenheim’s Michael Morris, who has a “buy” rating on the stock and a 12-month price target of $265, said the growth potential for Basic with Ads is outside the U.S. “Nine of the 12 launch markets have membership penetration of broadband homes at levels below the 54% U.S. rate,” Morris wrote in a note to clients.
Wedbush’s Michael Pachter, who has reversed his long-held skepticism about Netflix shares to become a bull , wrote that he feels “confident that Netflix is prudently positioning itself as an immensely and increasingly profitable company.” He reiterated an “outperform” rating on the stock, maintaining a 12-month price target of $280.
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