Netflix logs 10% gain amid positivity from first ad upfront
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Netflix (NASDAQ:NFLX) boosted its gains to 10% Thursday as positive reaction rolled in to its first-ever upfront presentation -- the mechanism by which more traditional TV networks have historically secured heavy commitments to advertising.
That comes after the past year brought Netflix its first ad-supported service tier after years of internal resistance. And the company noted in its upfront that the ad plan neared 5M global monthly active users in just six months after launch. (How the user total translates into subscriptions exactly remains to be seen.)
Netflix stock (NFLX) tagged a session high of $375.48 Thursday, a hair off its 52-week high of $379.43 (reached intraday on Feb. 3).
The company had planned to make a splash with a traditional in-person upfront presentation, but the ongoing Hollywood writers' strike (and plans to picket the event) interfered with that, and Netflix switched to a virtual presentation.
More than a quarter of new sign-ups are opting for the ad-supported plan in countries where it's available, the company said.
Meanwhile, the median age of ad-supported subscribers is 34 -- and some 70% of those opting for that plan are in the prime advertising demographic aged 18-49.
Co-CEO Greg Peters took a mild shot at rival HBO Max (WBD), which is set to relaunch a combined HBO/Discovery streaming service as "Max" next week with a tagline "The One to Watch."
"Despite all the competition out there, Netflix is the most popular streaming service today," Peters said. "To be the one to watch, you need everyone watching. And thatâs what sets Netflix apart."
Pointing to Nielsen ratings, Peters noted that in 2023 Netflix has had the No. 1 original streaming program for 15 out of 16 weeks, and the No. 1 movie for 14 of those weeks.
"We are building a forever business," said Jeremi Gorman, Netflix's president of Worldwide Advertising. The company focused on "areas advertisers told us matter most": geographic, age and gender targeting; third-party verification; and deploying brand suitability mechanisms.
As for engagement, Netflix's reach at two or more hours is "higher than almost everyone else's reach at a one-minute threshold," Gorman said. "Two hours compared to one minute ... it's the difference between foundational viewing and simply sampling."
The company noted brands will be able to sponsor popular series at launch; to seek brand placement in Netflix's top 10 programs; and starting in Q4, to use Nielsen Digital Ad Ratings. It also reached a partnership with EDO for engagement metrics, including the finding that viewers are more than four times more likely to engage with an ad on Netflix vs. other streamers, and 4.5 times more likely than on linear TV.
Meanwhile, J.P. Morgan spent time with management around the upfront and aside from the advertising commentary, found some positives in the ongoing crackdown on password sharing.
After a short delay, the broader expansion of paid account sharing is on track for Q2, Netflix has indicated. 
"Therefore, the rollout seems fairly imminent, and importantly, NFLX believes it has also improved communications and implementation since the 4 markets rolled out in February," analyst Doug Anmuth said. "That should result in less friction for members and borrowers, and ease near-term noise and churn reaction."
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