Wall Street criticizes Netflix for selecting Microsoft as its advertising partner.

    Author Peter OlaoluwapoPosted on Categories ConsumerTags , , , , , , , , , , , , , , , , , , ,
    Wall Street criticizes Netflix

    According to an analyst, Netflix’s (NFLX) unexpected selection of Microsoft (MSFT) as its advertising technology partner could postpone the introduction of a lower-cost, ad-supported service tier until late next year. On Thursday, Netflix (NFLX)  stock fell. Wall Street had thought that Netflix (NFLX) will generate advertising income by the fourth quarter of 2022, analyst Laura Martin of Needham wrote in a note to clients on Thursday. We estimate the earliest Netflix (NFLX) can launch an ad-supported tier with Microsoft is in the third quarter of 2023.

    She stated that if Netflix (NFLX) had chosen Magnite (MGNI) or Comcast (CMCSA)-owned FreeWheel, it might have displayed video advertisements on its platform in the fourth quarter of this year. Martin reaffirmed her hold recommendation on Netflix (NFLX) stock. She also said that “Since we expect Netflix (NFLX) to report weak subs until it has a lower-cost, ad-driven tier, we expect 12 months of share price weakness from here.”

    Netflix (NFLX)  Stock Declines

    Today’s closing price for Netflix (NFLX) stock on the stock market was 174.78, down 1%. The disclosure caused a decline in ad tech firms that were potential Netflix (NFLX)  partners. Shares of magnite fell 10.4% to 7.23. The Trade Desk (TTD) saw a drop of 6.7% to 41.21. Roku (ROKU) lost 5.4 % to 82.34. Alphabet (GOOGL), the parent company of Google, is another prospective advertising partner. Its shares fell 0.9% to 2,207.35. Matthew Harrigan, a benchmark analyst, still rates Netflix (NFLX) shares as a sell.

    Microsoft Not A First-Tier Ad Partner

    According to a research published on Thursday, “Microsoft is not seen as a first-tier digital video ad tech ecosystem entrant akin to Google, NBCUniversal/FreeWheel, Roku, and Trade Desk,” despite its acquisition of AT&T’s Xandr in 2021 and its programmatic capabilities. Leader in subscription video on demand Late on Wednesday, Netflix (NFLX) revealed its partnership with Microsoft.

    According to IBD Stock Checkup, Netflix (NFLX) stock is ranked fifth out of 23 stocks in the industry category Leisure-Movies & Related. IBD Composite Rating: 43 out of 99, which is below average. IBD’s Composite Rating combines important technical and fundamental data to provide investors a better understanding of a stock’s strengths. The Composite Rating of the top growth stocks is 90 or above.

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