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Netflix’s stock extended its rally Friday as investors continue to slowly regain confidence in the streaming giant after a decline in subscriber growth earlier this year fueled market panic.
Netflix co-CEO Reed Hastings in 2016.
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Key Facts
Netflix shares rose 5% to $326 Friday, outpacing a largely flat market, after analysts at Cowen and Wells Fargo raised their price targets for the stock.
That’s a 69% increase from its $193 ticker six months ago.
Netflix is by far the biggest riser on the S&P 500 during the period, according to FactSet data as of mid-morning Friday, with no other stock rising more than 61% in the timeframe and the index down 1.3% overall since June 9.
But Netflix is still down 45% year-to-date, placing it among the 50 worst performers on the S&P, though Netflix has by far shed its dubious crown of the worst performer on the index it achieved in August.
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Surprising Fact
Netflix’s primary competitors have not fared as well over the last six months, with shares of streaming rivals Disney, Warner Bros. Discovery and Paramount dropping 9%, 29% and 35% during the period, respectively. Other members of the FAANG (Facebook, Amazon, Apple, Netflix, Google) group of West Coast technology giants have similarly failed to match Netflix’s latest rally. Facebook parent Meta is down 37% over the last six months, Amazon 23%, and Google parent Alphabet 18%, while Apple is up 1% during the period.
Key Background
With the company well-positioned to capitalize on a thirst for online entertainment amid stay-at-home orders during the pandemic, Netflix shares rose more than 60% from March 2020 to November 2021, peaking at $692. Consecutive quarters of subscriber losses to start 2022 sent Netflix’s stock spiraling, with shares dropping 35% on April 20 after the first reported user decline. Investors piled back into Netflix after the company’s strong quarterly earnings report revealed 2.4 million net subscriber gains and the rollout of its less expensive, advertising-supported tier.
Crucial Quote
Netflix’s “global scale, strong brand, and superior user experience position it to remain a leader” in the ever-changing content space, Bank of America analyst Jessica Reif Ehrlich wrote in a note to clients last month, citing optimism about what the new ad tier and password sharing crackdowns would mean for the company’s bottom line.
Further Reading
Netflix Is Now The Worst-Performing Stock In The S&P 500 As Shares Plunge Over 60% In 2022 (Forbes)
Netflix Stock Hits 6-Month High — Even As Wall Street Remains Skeptical (Forbes)
Here’s How Big Tech Stocks Have Performed In 2022 As FAANG Softens Its Bite (Forbes)
