Key points:

  • In the second quarter of 2024, Netflix posted its lowest subscriber growth in five quarters.
  • Netflix’s advertising revenue is expected to more than double in the second quarter.
  • Netflix shares are up nearly 35% for the year, outperforming the S&P 500.

Between April and June, Netflix was projected to have its weakest subscriber growth in the past five quarters. This is due to a slowdown in growth following the introduction of strict restrictions on password sharing, as well as audience attention shifting to summer sporting events such as the European Football Championship.

Netflix upcoming report

In the second quarter of 2024, the Netflix streaming service, according to LSEG estimates, attracted about 4.82 million new subscribers. This is the lowest quarterly increase since the first quarter of 2023 and half the 9.3 million subscribers acquired in the previous three months.

Despite the slowdown in subscriber growth, the company made significant progress in advertising revenue. With the introduction of a cheaper subscription plan with advertising, Netflix’s sector revenue is expected to more than double in the second quarter.

The company’s total revenue is projected to increase 16.4% to $9.53 billion, the fastest growth since the second quarter of 2021.

In the second quarter, Netflix original shows led the way in viewing, such as the historical drama “Bridgertons” and the series “Fawn”, based on comedian Richard Gadd’s story about a stalker.

Investors will be closely watching Netflix’s second-quarter results on Thursday to gauge the effectiveness of the company’s efforts to expand its lower-cost ad-supported plan, as well as new growth drivers.

Focus on advertising services

In May, Netflix announced that its new ad-supported tier had reached 40 million monthly active users worldwide. This represents 40% of all registrations in countries where it was available, up from 23 million in January.

This promotional move by the company attracted the attention of investors. Netflix shares are up nearly 35% for the year, outpacing the S&P 500, which is up about 19%.

It’s worth noting that the summer months traditionally result in lower viewership for streaming services like Netflix and Disney+ due to seasonal factors including summer travel. Analysts also predict that the Olympic Games, which start on July 26, could further draw some viewers away from Netflix.

However, Netflix is ​​taking steps to diversify its offerings. In particular, the company announced a partnership with Comcast, under which Netflix will be available to Xfinity customers using the Peacock and Apple TV+ streaming services. In addition, Netflix is ​​expanding its content portfolio by adding more live events. An example is a deal to broadcast two National Football League games on Christmas Day, which creates attractive events for advertisers.

To fuel further growth, Netflix also revealed plans in May to create its own ad tech platform. It will give marketers more options to buy advertising and measure its effectiveness.