Netflix Incursion on Live Wrestling
Netflix Ventures into Live Sports
Netflix (NFLX) is approaching its all-time high set in November 2021 as **investors** commend the company's foray into sports and the success of its ad-supported tier. Recently, Netflix secured the streaming rights to two NFL games scheduled for Christmas Day as part of a three-season deal. Additionally, the company announced at its May upfront presentation that its ad tier has reached 40 million global monthly active users, a significant increase from the 15 million users reported in November and a 35-million-user increase compared to the previous year.
This growth comes as Netflix raises the prices of its ad-free subscriptions to attract more users to its ad-supported offering. The platform's **password-sharing crackdown** has also boosted top-line growth, adding over 9 million new subscribers in the first quarter alone. On Friday, Netflix shares were trading around $685, nearing the record high of $691.69 set on November 17, 2021.
Financial Performance and Market Reactions
Netflix stock has risen about 40% year-to-date, though the journey has not been entirely smooth. In April, Netflix announced it would stop reporting subscriber figures starting next year, raising concerns about its long-term subscriber growth and causing shares to drop. Despite this, some **Wall Street analysts** have praised the company's recent strategies to drive revenue growth. Needham analyst Laura Martin reiterated her Buy rating and $700 price target in a recent note.
Martin expressed optimism about Netflix's global scale, recent price hikes for premium offerings, and its ability to bundle with other services to reduce churn. She also anticipates further revenue acceleration from advertising, which should expand margins. In the first quarter, Netflix reported operating margins of 28.1% and projected full-year 2024 margins of 24%, up from 21% in 2023. "NFLX represents a scaled, global, premium video platform with a well-known brand and a first-mover advantage," Martin stated. "Margin expansion and rising free cash flow will be key upside value drivers in 2024 and 2025."
Innovative Moves and Future Prospects
Netflix has recently leaned into live events, such as its successful Tom Brady roast, and expanded into live sports. Prior to its NFL agreement, the company announced a 10-year deal with TKO Group Holdings' WWE (TKO) to bring WWE’s flagship program Raw to the streaming service beginning in 2025. Additionally, Netflix will host a live wrestling event between Jake Paul and Mike Tyson in November, rescheduled from its original date in July.
Investors have responded positively to Netflix's acquisition of live sports rights, viewing it as a strategic use of its $17 billion content budget. They believe that high-quality exclusive sports content, such as WWE, the Tyson vs. Paul fight, and the NFL, will attract new subscribers and enhance engagement more effectively than new entertainment content alone. Earlier this week, Netflix announced Netflix House, an immersive experience offering retail, dining, and live attractions based on its popular programming like "Bridgerton" and "Squid Game."
"They can do innovative things," Martin told **Yahoo Finance** regarding the Netflix House announcement, describing it as "their version of a theme park." She added, "I think the return on capital for some of these things is unknown and unproven. But they're really innovative, and I think that's interesting."
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