Netflix stock rises after ad tier reaches 15 million monthly active users

Netflix (NFLX) announced its advertising tier has reached 15 million global monthly active users — one year after its launch and a significant increase from the 5 million users the company announced back in May.

Netflix stock climbed more than 1% in morning trading following the announcement. The stock is up more than 40% year-to-date, far outpacing the S&P 500's (^GSPC) 10% gain over that same time period.

"We have built an incredible foundation, focusing on areas advertisers told us matter most, all while delivering unmissable entertainment at an unbeatable value," Amy Reinhard, the company's new head of advertising, wrote in a blog post on Wednesday.

To note, monthly active users, otherwise known as MAUs, are not the same as paying subscribers. The company has yet to reveal actual subscriber figures for the ad tier, or how much revenue it's generated so far. MAUs can include multiple people using the same account.

In the blog post, Reinhard called out new features and enhancements like a "binge ad" format, which allows viewers who watch four episodes in a row the opportunity to watch the fourth episode ad-free. That feature will be rolled out in the first quarter of 2024.

Netflix has also been pursuing a sponsorship model for its ad product, which will allow advertisers to "partner" with a new movie or TV show. Frito-Lay kicked off the sponsorships with the most recent season of "Love is Blind." Additional sponsors will be announced for reality series "Squid Game: The Challenge" and the upcoming final season of "The Crown."

Wednesday's news follows Netflix's latest earnings report, which said ad plan membership is up almost 70% quarter over quarter.

At the time, the company said there's still "more work to do to scale this business," particularly when it comes to securing higher ad dollars. Slow growth in the ad tier has also been a concern for analysts who have highlighted the length of time it will take for advertising to contribute to the top line.

Still, the $6.99 offering has been a major revenue initiative for the company, coupled with its crackdown on password sharing — which helped boost subscribers in its latest quarter. The company also announced price hikes on certain plans in the US, UK and France when it released earnings last month as it works to boost revenue and improve margins.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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