Netflix shares close lower on Friday, company’s subscriber base could shrink 23% if advertising is added, survey shows

Netflix Inc could see its subscriber base shrinking substantially, in case it adds advertising to its streaming service. Such a conclusion was based on results from a survey of 1 765 TV customers in the United States aged between 16 and 74, who watch at least one hour of television every week and have broadband in their homes.

Netflix shares closed lower for the third time in the past fourteen trading sessions on NASDAQ on Friday. The stock went down 0.31% ($1.17) to $380.55, after touching an intraday low at $375.61, or a price level not seen since July 2nd ($370.31).

Shares of Netflix Inc have risen 42.18% so far in 2019 compared with a 19.29% gain for the benchmark index, S&P 500 (SPX).

In 2018, Netflix Inc’s stock went up 39.44%, thus, it again outperformed the S&P 500, which registered a 6.24% loss.

23% of the people surveyed by Hub Entertainment Research stated that they would definitely or probably cancel their Netflix subscription, in case the company started to run advertisements at the current price level they pay or $1 cheaper. This would translate into a loss of almost 14 million subscribers from the 60 million paid subscribers the company has in the United States.

14% of the people, who participated in the survey, stated that they would definitely or probably cancel their Netflix subscription, in case they paid $2 less.

12% of the respondents said they would definitely or probably cancel their subscription, in case it was $3 cheaper.

At present, no ads are run by Netflix, but sometimes products could appear within popular shows. According to CNBC, paid placement is rarely accepted by Netflix. Still, some brands could pay a third-party to help facilitate product placements.

Analyst stock price forecast and recommendation

According to CNN Money, the 35 analysts, offering 12-month forecasts regarding Netflix Inc’s stock price, have a median target of $425.00, with a high estimate of $500.00 and a low estimate of $183.00. The median estimate represents an 11.68% upside compared to the closing price of $380.55 on July 5th.

The same media also reported that at least 27 out of 40 surveyed investment analysts had rated Netflix Inc’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 2 analysts had recommended selling the stock.