Netflix (NFLX) shares hit a record close on Tuesday, ending the day up more than 1% to just under $699 per share. The stock’s previous record close was just under $692 in 2021.
Earlier in the session, the stock also hit an intraday high of $711 per share, higher than the previous intraday high of $701.
On Tuesday, the company announced its intention to re-enter the advertising market. In a blog post, the company revealed that it had secured “a more than 150% increase in upfront ad sales commitments versus 2023.”
Netflix’s successful negotiations, a period in which networks and media companies try to secure advertising campaigns for upcoming series and events, come as the platform shifts its focus toward live sports and focuses on its biggest shows.
According to the company, upcoming films and series such as “Happy Gilmore 2” and “Squid Game 2,” along with its recent acquisition of live sports content such as the NFL Christmas Day games and WWE Raw, which launches in January 2024, have contributed to its success.
“Our advertising clients continue to be excited about our highly engaged audience and the diversity and quality of our programming,” said Amy Reinhard, president of advertising at Netflix.
Reinhard named advertising partners as LVMH, Amazon, Hilton, L’Oreal and Google, among others. The company will launch its own ad technology platform globally in 2025.
But it’s not just advertising that’s fueling the recent rally.
Analysts have also said the company is well-positioned to raise prices. Netflix last raised the price of its Standard plan in January 2022, taking the monthly cost from $13.99 to $15.49. It also raised the price of its Premium plan by $2 to $19.99 per month at that time; the company raised the cost of that plan again in October to $22.99.
The company has yet to raise the price of its ad-supported offering, which launched less than two years ago and, at $6.99 per month, is still one of the cheapest ad-supported subscriptions of any major streaming service.
Netflix has previously said that its goal is to make advertising “a more substantial revenue source that contributes to continued, healthy revenue growth in 2025 and beyond.” As a result, it will phase out its cheapest ad-free streaming plan, making the $15.49 Standard plan the cheapest offering for an ad-free experience.
In a note published earlier this month, Jefferies analyst James Heaney said the Standard plan is likely to be the only one hit by a December price increase, especially given the company’s move into sports — a move that will “further increase the price.” [its] “Price-determining power.”
“We believe NFLX is positioned for a year-end price increase this year,” Heaney said. “We see the business in NFL games (only ~2% of annual content spend) as a significant Q4 subscriber driver, creating further tailwind for NFLX’s password sharing initiative and supporting a price increase.”
In last month’s earnings report, Netflix said it was “making steady progress in scaling revenue.” [its] advertising business’, with ad memberships growing 34% quarter-over-quarter, driven in part by the elimination of the basic subscription in certain markets.
“Given this continued progress, we believe we are on track to achieve critical ad subscriber scale across our advertising countries by 2025, creating a strong foundation from which to further grow our ad membership in 2026 and beyond,” the company said.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and send her an email at alexandra.canal@yahoofinance.com.
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