Consumer Discretionary

By Philip van Doorn Warner Bros. Discovery is very cheaply priced to expected sales over the next year Netflix Inc. has been firing on all cylinders, but analysts see little upside for the stock from here. That sets the stage for a screen of media companies, to see which ones are favored by analysts and which are expected to increase sales and profits most rapidly over the next two years. Shares of Netflix Inc. (NFLX) rose 11% on Wednesday, following the video-streaming pioneer’s report late Tuesday of a spike in quarterly profits from a year earlier, as revenue rose 12.5%. That last figure showed the effect of newer advertising-supported subscriptions, as well as what the company calls “monetizing sharing.” Netflix took a flexible approach to curb password sharing, including giving users the ability to add family members to their accounts for less than it would cost to add another subscription.

By Therese Poletti Netflix Inc.’s growing advertising business is proving that the streaming company’s bet that its customers would tolerate commercials in exchange for a cheaper price is paying off, and Wall Street should win as well. In November 2022, Netflix launched ad-supported subscription tiers, a complete about-face on its longstanding policy to never have commercials on its service. Some were skeptical that this move, which harkens back to broadcast TV, would work. But Netflix is proving those naysayers, including this columnist, wrong. In a livestreamed call after reporting fourth-quarter earnings Tuesday, Netflix (NFLX) executives said that they saw 70% growth in advertising in the quarter, with 23 million average users (MAUs), a gain of about 8 million from the previous quarter. Executives told Wall Street analysts that the ad-supported tier now accounts for 40% of all Netflix sign-ups. “And we see that continuing to grow in the quarters ahead,”