On Friday, Raymond (NS:RYMD) James maintained a Market Perform rating on Netflix (NASDAQ:NFLX) shares, as the streaming giant continues its remarkable market performance with a 105% return over the past year. According to InvestingPro analysis, Netflix is currently trading above its Fair Value, with the stock near its 52-week high of $927.
The firm highlighted that Netflix has seen an increase in viewer penetration, marking the first rise after six consecutive survey period declines. Approximately 56% of respondents reported using Netflix, which is a significant rise from 50% in June 2024 and 53% in December 2023.
The usage of Netflix remains most concentrated among younger users aged 18-29, which increased by five percentage points since June 2024, and among older users, with a 13 percentage point increase from June 2024.
Netflix continues to hold a strong position in consumer preference, outperforming competitors such as Amazon (NASDAQ:AMZN) Prime and Hulu. This market dominance is reflected in the company's robust financial performance, with revenue growing at 14.8% and maintaining a healthy 45.25% gross margin, according to InvestingPro data.
When participants were asked which service they would retain if they had to reduce their number of subscriptions, 51% chose Netflix as part of their top three, significantly ahead of Amazon Prime's 37% and Hulu's 25%.
The company's ad-supported tier is also gaining traction. The data shows that 68% of Netflix users are now using the ad tier, up from 52% in June 2024. Additionally, 11% of respondents expressed potential interest in the ad tier, although this represents a 6 point decrease since June 2024. In total, 79% of users have either adopted the ad tier or are interested in it, which is an increase of 11 points in the last six months and 12 points from the previous year.
Most of the new ad tier users have transitioned from other Netflix plans rather than from other services. Netflix has reported an average revenue per user (ARPU) increase from users of the ad-supported tier compared to those on the now-deprecated Basic plan.
However, the ARPU from ad tier users is slightly lower compared to Standard subscribers. This shift in user preferences towards the ad-supported tier could indicate a change in the way consumers engage with Netflix's service offerings.
InvestingPro subscribers can access over 20 additional exclusive insights about Netflix's financial health and valuation metrics, along with a comprehensive Pro Research Report that provides deep-dive analysis of the company's performance and prospects.
In other recent news, Netflix's third-quarter results showcased an impressive revenue growth of 14.8% over the past year, reaching $37.6 billion.
The streaming giant's introduction of an ad-supported tier has been positively received, accounting for half of the new sign-ups in countries where it was available during the third quarter, bringing the total monthly active users for the ad tier to over 70 million.
Netflix's recent foray into live streaming events was highlighted by the Jake Paul vs. Mike Tyson boxing match, which attracted over 108 million live global viewers. Canaccord Genuity and Evercore ISI adjusted their price targets for Netflix, maintaining Hold and Outperform ratings respectively.
BofA Securities and Pivotal Research also elevated their price objectives, citing the company's positive earnings momentum and its evolving opportunities in advertising and live content. These are recent developments in the company's journey.
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