Netflix seemed to have had a really good time during the pandemic, adding more than 8 million subscribers since COVID-19 had kept everyone in their homes looking for new sources of entertainment. The company was able to make out with an impressive 60% growth in share price between the start of 2020 all the way towards the end of 2021.
Yet not all good things last as Netflix’s recent analyst downgrading has brought the price hurdling towards pre-pandemic prices. In this article, we will explore Netflix’s price history and see what opportunities lie ahead for the streaming leader.
Netflix Share Performance History
It isn’t really a surprise to conclude that the influx of new subscribers was at least in part due to the frenzy of new entertainment-seeking retail consumers who suddenly found themselves indoors for the majority of 2 years.
Each quarter saw an additional 1 million subscribers added to the Netflix roster of members in 2021, but there were musings of slower growth even then. Compared to the sky-rocket 10.1 million subscribers added in 2020, these growth figures start looking lackluster by comparison.
Netflix themselves have acknowledged this, adding that some of Netflix’s major planned attractions (such as a new series) were delayed due to production halts that occur with local lockdowns in different areas of the world. At the start of 2020, they saw their share price at their usual $325 a share. At the end of 2021, it had nearly doubled to $602 a share.
Factors Influencing Price Drop
If anything can influence a stock’s price movements, it’s the company’s own earnings report. While Netflix definitely beat profit on earnings per share and even met revenue projections, the “smaller” growth of consumers at 8.19 million in the fourth quarter of 2021 didn’t meet investor expectations of at least 8.5 million based on 2020’s last new subscriber count.
While a missed portion of what looks to be roughly 300,000 subscribers might not seem too much in terms of the 222 million subscribers strong list that they have collected thus far, this lower turn-out signaled to investors that their high-times during the pandemic is nearing its end. Investors were quick to turn on the streaming giant in after-market trading, plunging as much as 20% in value and continuing on from there.
There’s definitely a lot to take in with the Netflix situation. On the one hand, investor concerns aren’t unfounded and it’s usually the first to get out of a devaluing company that gets to recoup their investments. Netflix showcasing consistently slower membership growth was a key signal to investors that it may be time to jump ship.
On the other hand, Netflix’s business fundamentals are staying strong. Their 222 million subscriber bases will definitely continue to net them steady profits in the coming periods, while their new focus on the sector of gaming may indicate new prospects of growth for the company.
It’s best to monitor stock prices as the months in 2022 continue to roll through. Interested investors should consider purchasing the stock as it approaches near pre-pandemic levels if they want to partake in Netflix’s plans for growth. Those looking to join in on Netflix’s COVID-19 driven growth may be late to the station as the current market shows.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only