Trading Netflix on New Ad-Supported Subscriber Business Model
From Netflix’s record high of $700.99 in November 2021, the share price has fallen more than 70% to the current low of the year so far recorded in May 2022 at $162.71.
With a loss in subscribers and more competition in the streaming market, Netflix has had to rethink its business model. Can its new, ad-supported model help revive the company’s fortunes?
Learn how to trade Netflix stock below.
|Symbol for Invest.MT5 Account:||NFLX|
|Date of Idea:||20 Sept 2022|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Netflix to Launch New Ad-Supported Subscription
After losing more than 1 million subscribers this year, Netflix is trying new ways to attract people back to its streaming platform. In November, it is reported that Netflix will launch a cheaper ad-supported subscription.
The service will launch in the United States, Canada, Australia, France and Germany and is expected to cost between $7 and $9. Current subscribers to its standard subscription will not see any ads.
This has caused some analysts to increase their forecast for the stock. Analysts at Oppenheimer upgraded the stock to outperform as they believe the launch of the new ad tier will accelerate subscriber growth and is in a unique position to time new programme launches to attract the highest advertiser rate.
The firm believes that the new model could attract 282 million subscribers by 2025 with global advertising revenue of $4.6 billion from total revenue of $42.4 billion.
However, Netflix pushed up the launch of its service to get ahead of competitor Disney+ launching an ad-supported model in December. Earlier this year, Disney reported figures that showed it had surpassed the amount of Netflix subscribers for the first time.
While Netflix’s ad model could attract additional revenue and has some analysts raising their forecasts, the streaming sector is extremely competitive with rivals such as Disney+, Apple+, HBO Max and others.
Netflix Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Netflix stock forecast in the past 3 months, there are currently 8 buy, 19 holds and 5 sell ratings on the stock. The highest price level for a Netflix stock forecast is $365.00 with the lowest price target at $157.00.
The average price target for a Netflix stock forecast is $238.93.
Source: TipRanks, 20 Sept 2022
An Example Trading Idea for the Netflix Stock Price
An example trading idea for the Netflix share price could be as follows:
- Buy the stock at $255.00 to allow for current market volatility.
- Target the highest analyst price target at $365.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Netflix shares:
- If target is reached = $1,100.00 potential profit ($365.00 - $255.00 *10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering that Netflix stock was down more than 70% this year.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Netflix would result in a commission of $0.20 ($0.02 * 10 shares).
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Netflix Stock in 4 Steps
With Admirals, you can buy shares in companies like Netflix with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.
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Do You See the Netflix Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Netflix's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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