Shares in TV and film streaming platform Netflix (NFLX:NASDAQ) are down 60% year-to-date amid a subscriber exodus and fears the streaming market is becoming oversaturated. However, sentiment towards Netflix is starting to improve after various analysts upgraded their ratings on the shares.

Netflix’s new advertising-supported cheaper subscriber tier, combined with efforts to clamp down on password sharing, represent ‘catalysts that can drive a material re-acceleration in revenue growth’ according to Evercore ISI analyst Mark Mahaney, who has upgraded his rating on the stock from ‘in-line’ to ‘outperform’.

With the planned launch of the advertising tier later this year, ‘there is a clear catalyst on the horizon, and valuation is intrinsically attractive,’ argues the analyst. Meanwhile, JPMorgan sees investor sentiment towards Netflix picking up, and Macquarie and Oppenheimer have also upgraded their ratings on the stock.

Netflix is embracing advertising after struggling to hold on to the supernormal subscriber gains generated during the lockdowns necessitated by the Covid pandemic.

The Wall Street Journal recently reported that Netflix projects the cheaper, advertising-supported tier could reach about 40 million viewers by the third quarter of 2023. This new subscription package will suit consumers struggling to pay for standard Netflix subscriptions as the cost of living soars around the globe.

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