In 2022, it came to light that Netflix, Inc. NFLX was hemorrhaging customers. Intense competition and a crackdown on password-sharing led to a drastic dip in its stock price.
Despite the initial setback, the crackdown initiated a dramatic turnaround. Since its launch in May 2023, Netflix has attracted millions of new subscribers amidst the fierce streaming landscape. In 2024, the entertainment giant has outpaced its competitors and witnessed exponential growth in its share price. Year-to-date, Netflix has surged by 44.7%, surpassing the S&P 500’s 20.2% growth.
Netflix’s Stock Performance
Netflix’s shares have soared by a staggering 113.6% since the onset of the password crackdown, while its peers have faltered by 4.7%. Competitors like Warner Bros. Discovery, Inc. WBD and Fox Corporation FOX have also experienced mixed fortunes, with Warner Bros. declining by 38.7% and Fox rising by 22.9% during the same period.
Netflix’s stock surge can be attributed to its new offering of a more affordable ad-supported viewing option. As a global leader in digital streaming, Netflix provides subscription video-on-demand services in over 190 countries and is renowned for its original content.
The company is now eyeing expansion into new arenas such as live events and gaming to solidify its dominance in the streaming era. Recent announcements include securing the rights to host Christmas Day NFL games in the coming years and a $5 billion deal to stream WWE’s flagship wrestling show, Raw.
In July, Netflix reported second-quarter 2024 earnings of $4.88 per share, surpassing the Zacks Consensus Estimate by 3.83%. Earnings jumped by 48.3% from the previous year, with revenues reaching $9.55 billion, a 16.8% increase year-over-year. The company experienced a 16% growth in paid memberships, marking the fourth consecutive quarter of accelerated revenue expansion. Netflix’s projected earnings growth rate for the current year stands at 58.6%.
Considering the anticipated decline in interest rates and an upswing in discretionary spending, further growth is expected for Netflix’s stock.
Netflix’s Future Outlook
Netflix’s astounding turnaround since the password crackdown serves as a testament to its resilience and adaptability in the volatile streaming industry. The company’s strategic moves to diversify its offerings and capitalize on emerging trends bode well for its continued success.
Investors should keep a close eye on Netflix as it navigates the evolving streaming landscape, cementing its position as a force to be reckoned with in the entertainment sector.
