Netflix finally announced to investors what they want to hear. Now comes the more complex stage.

It wasn’t long before the Wall Street stock market was stunned by such bleak news coming from Netflix: Between April and June, The company lost 970,000 subscribers.

But investors are not bothered by the number of clients who have dropped out. In fact, they are satisfied.

What’s happening: Netflix (NFLX) stock rose more than 6% ahead of the stock market Wednesday after the company reported its latest results. Will the logic be linear? It could have been much worse.

It was a quarter where ‘less bad news is good news’, analysts at a publishing house said. Bespoke Investment Group On a note to customers.

What’s going on: Netflix has already lowered expectations to the limit, I thought she would lose 2 million subscribers in the last quarter after losing 200,000 in the first three months of the year. This made room for surprise, unexpectedly, on the positive side.

“We’re talking about losing one million instead of losing two million,” President Reed Hastings said in a statement to analysts. “So our enthusiasm is dampened by the less bad outcomes.”

The biggest loss for Netflix subscribers occurred in its largest markets, the United States and Canada, with the streaming service confirming it lost 1.3 million users in the second quarter.

This was offset by increased subscriptions elsewhere, a sign that the company’s investment in foreign language programming is paying off. The release of the fourth season of the hugely popular Stranger Things series also provided a boost.

Outlook: Netflix still has a lot of work to do to convince investors that it’s on the right track. Its stock is down nearly 67% so far. Other tech companies, such as Alphabet, which controls Google, and Meta on Facebook are down 21% and 48%, respectively. The S&P 500 is down 17%.

This will involve making major changes at work. Netflix, in partnership with Microsoft, is developing a new low-price option that’s backed by ads, in an effort to win over customers who care more about their spending when inflation intensifies. It is expected to be released early next year.

In addition to, Also trying to stop password sharing. The company estimated that 100 million households use Netflix but do not pay directly for the service.

“We know this will mean a change for our affiliate members,” he told shareholders. “Our goal is to find a paid engagement offer that is easy to use and we believe will work well for our members and for the offerings we may launch in 2023.”

Rich Greenfield, an analyst at LightShed Partners, believes there is plenty of room for success in Netflix’s shift to advertising.

“Netflix’s advertising opportunity is real and directly related to the amount of time you spend on this streaming service compared to all other services,” he added in a post on Twitter.

But anticipating such a big change will not be easy. Netflix’s entry into the advertising space will be difficult. The competition for viewers among streaming services is complex. And if a large group of subscribers opts for the least expensive version to save money, it will hurt revenue even when new users are registered.

“We urge caution in the belief that Netflix will be able to use advertising to increase revenue out of thin air,” Bank of America analysts said in a report published late last month. “The advertising ecosystem is large, complex and expensive, and their ad competitors have a multi-year advantage over them.”