Netflix Stock News and Forecast: NFLX rises as JPMorgan moves bullish on advertising model
- Netflix looks set for a boost on Tuesday as JPMorgan issues upbeat note.
- NFLX is set to gain as JPMorgan says advertising could add over $2.7 billion in revenue.
- NFLX stock is down 61% year to date.
Netflix (NFLX) stock is trending on Tuesday due to JPMorgan issuing a bullish note outlining the potential for the advertising tier that Netflix is due to release shortly. Netflix has had a troubled year with regard to stock performance. While the platform itself remains almost essential in the modern household, the stock itself has seen a sharp decline. Netflix's valuation had pushed too high during the pandemic printing phase, and like many other lockdown stocks it has corrected harshly.
Netflix stock news
JPMorgan was out with a positive note on the stock on Tuesday. The investment bank sees the potential of the new advertising tier as having the possibility to add as much as $2.7 billion in revenue from the US and Canada alone. It remains to be seen how well consumers react to advertising as that was one of the key USPs (unique selling points) of streaming versus traditional media. No ads, no waiting, binge. Already many streaming services have ditched binge-watching and are releasing shows every week, so this may be another step toward the old-school mainstream TV model.
Ads and having to wait a week for a new show sounds very much like why we left TV stations in the first place. However, given the strong inflationary environment, there is no doubt the cheaper the better in some consumers thinking, so the advertising tier may see good uptake. Spotify uses a similar model.
Also of note, especially to AMC and APE stockholders, is the limited cinema release of the latest Netflix sequel, Glass Onion A Knives Out Mystery. The sequel again stars Daniel Craig in the lead role. Netflix, according to reports, will give the film just a week in cinema before streaming it a month later, and it will only appear on 600 cinema screens. This is a test launch for Netflix as I believe it is the first Netflix film to go first to the cinema before appearing on the streaming service.
Netflix stock forecast
Netflix has been attempting to form a bottoming pattern with trendline support now at $223 and below the series of lows at $165.90. This is capped on the upside and is a wedge or pennant pattern. This can often lead to powerful breakouts. The key level to watch is $251.75.
NFLX 1-day chart
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
