Netflix Rises: Are Streaming Wars Over?

January 26, 2024 16:16

In the last few years, investors and traders have become spectators of the so-called “streaming wars” with Netflix (NFLX) being one of the main competitors. While most streaming apps grew during the pandemic era, Netflix emerged as one of the most popular and seems to have kept its momentum going as the world returned to normality.

Some say that numbers don’t lie, so in this article, you will have the chance to review some facts regarding Netflix’s performance and what analysts forecast.

Netflix Shares Jump On Q4 Earnings Report

On January 23rd, Netflix released its Q4 2023 earnings report as expected. The recorded figures surpassed analysts’ expectations, boosting optimism related to Netflix’s growth. 

According to the report, Netflix subscribers reached 260.8 million subscribers, with the number growing by 13.1 million just in the last quarter of the previous year. Market analysts had expected 8 to 9 million to have registered a new account with Netflix.

The earnings report was accompanied by a board statement that said the following: “As our competitors adjust to these changes, it’s logical to expect further consolidation, particularly among companies with large and declining linear networks. We’re not interested in acquiring linear assets. Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade.”

Netflix Combats Password Sharing, Adds New Programmes

In the past few months, Netflix has engaged in a shared password crackdown as some subscribers had been sharing accounts with family members or friends, hurting the app’s revenue. Apart from setting such limitations, Netflix has rolled out ad-supported account tiers with lower fees.

Source: Admirals MetaTrader 5. Netflix Inc. (#NFLX) - Monthly Chart. Date: 1 Apr 2016 to 26 Jan 2024, captured on 26 Jan 2024. Past performance is not a reliable indicator of future results or future performance.

 

Netflix announced that it would spend $5 billion to stream World Wrestling Entertainment's (WWE) Raw, starting in January 2025. The ten-year deal indicates that Netflix may be involved in broadcasting live sports events in the future.

Source: Admirals MetaTrader 5. Netflix Inc. (#NFLX) - Daily Chart. Date: 12 Sept 2023 to 26 Jan 2024, captured on 26 Jan 2024. Past performance is not a reliable indicator of future results or future performance.

 

According to a Reuters report, WWE Raw was the top show on the U.S. Network owned by Comcast,  bringing in 17.5 million unique viewers over the course of the year. Bank of America media analysts said Netflix was well-positioned to sell ads and develop "sports-related" programming that may bring professional wrestling to a new audience, referring to the success of the "Formula 1: Drive to Survive" documentary series in the US.

What Do Analysts Say Regarding Netflix Future Outlook

Market analysts, speaking to Yahoo Finance reporters, raised the share price target and added that “by all counts, Netflix is riding high. The success of their password sharing crackdown, the rollout of a low-priced ad tier and continued growth in lower priced developing markets have rendered the trauma of 2022 a distant memory."

However, other reports, such as the one coming from Morningstar, are less optimistic noting: “While we project subscriber growth will remain relatively high, we think the catalysts that led to outsize growth last year will significantly subside in 2024. But our sober look at the level of net member additions shouldn’t obscure how impressive Netflix’s performance has been. The stock has gotten ahead of itself even as we expect Netflix to remain dominant.”

Deutsche Bank’s economists raised the price target to $525 from $460 but warned investors regarding the company’s valuation, stressing that "Netflix is still the best story in media among the vertically integrated producers/programmers/ distributors. However, we think that Netflix's leadership position is fully priced into the stock at these levels. We see this as leaving little room for multiple expansion given what we think will be peak EPS growth in 2024."

Trading Netflix And Streaming Wars

Netflix shares are popular among investors and traders as positive financial reports have sparked media publicity. Drawn by the clout, beginner traders may consider trading Netflix or other streaming app shares. Experienced traders suggest that choosing financial instruments for a trading strategy should be the result of thorough research.

Beginner traders who lack experience can improve their trading knowledge by studying how-to guides and articles, watching webinars or attending educational seminars. While experience is surely valuable, beginner traders who are familiar with the ways trading works have a good starting point when compared with traders who neglect to educate themselves.

Last but not least, beginner traders should become accustomed to using risk management tools such as the stop loss and take profit orders. These tools are available in the most popular trading platforms such as the MT4 and MT5.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Miltos Skemperis
Miltos Skemperis Financial Content Writer

Miltos Skemperis’ background is in journalism and business management. He has worked as a reporter on various TV news channels and newspapers. Miltos has been working as a financial content writer for the last seven years.