Netflix Stock: Should You Buy, Hold or Sell?
As we’ve collectively navigated the COVID-19 pandemic, we’ve sought comfort wherever we could find it — and we’re continuing to find a lot of it on Netflix. During the lockdown in the first quarter of 2020, the digital streaming service added 16 million new subscribers. Netflix’s stock price surged 27% over a 12-month period.
More than a year and a half later, investors have reason to wonder if Netflix will remain a growth story. While the second and third quarters of 2021 were somewhat disappointing for the streaming service, it’s poised to make a much stronger finish in Q4.
A Market Leader, but Still on the Rise
Things are looking up. Netflix added 4.4 million new subscribers in the third quarter of 2021, which was 900,000 above its projection of 3.5 million. And subscriber projections for Q4 are grand at a whopping 8.5 million. Third-quarter revenue was $7.48 billion, up from $7.34 billion in the second quarter. Overall revenue reached about $22 billion in the first nine months of 2021.
At present, Netflix’s market cap, or estimated value, is $294.07 billion.
An Intensifying Competitive Climate
Although 4.4 new subscribers in the third quarter seems like good news, according to Nielsen, Netflix dropped from a 7% share of total U.S. television time in Q2 to 6% in Q3. What Nielsen terms as “other streaming” experienced a share increase from 8% to 9%, while YouTube, Hulu and Prime Video stayed the same and Disney+ dropped from 2% to 1%.
Netflix vowed in its Q3 shareholder letter that its goal is to improve its service as quickly as it can to gain a greater share of people’s time.
Netflix Stock: Q4 Prospective Spending a Concern
After Netflix released its third-quarter earnings on Oct. 19, its shares dipped by 1%, which is nothing compared to the 11% tumble it took in the first quarter. The slight drop can be partially attributed to the streaming service’s return to pre-pandemic content creation levels, which means spending is increased.
However, on Thursday the 21st, shares were up 3.41%, reaching a new all-time high for the year.
Although Netflix had been slowed down by production delays related to COVID-19, it seems to be back on track and expecting a roll-out of content like never before in Q4. This on the heels of its release of “Squid Game” on Sept. 17, which Netflix claims is its biggest TV show ever. Additionally, during Q3, Netflix made an agreement to acquire the Roald Dahl Story Company, pending regulatory approval, which means it will own the rights to works such as “Charlie and the Chocolate Factory,” “The BFG” and “Matilda.” The company plans to develop more of Dahl’s stories into new formats, including animation.
Netflix also won 44 Emmys in the third quarter — the most for any single network or service in a season of TV, with both “The Crown” and “The Queen’s Gambit” garnering 11 awards each.
Netflix Stock: Buy, Hold or Sell?
Should you invest in Netflix, proceed with caution or hit the brakes? According to CNN Business, 48 analysts rank Netflix as a buy — in other words, a green light.
Although several competitors aim to challenge Netflix, it’s still a top contender in the rapidly growing digital streaming sector. On top of that, it’s investing in itself, making content bets that are likely to add value for consumers and investors alike.
Cynthia Measom contributed to the reporting for this article.
Data is accurate as of Oct. 23, 2021, and subject to change.
This article originally appeared on GOBankingRates.com: Netflix Stock: Should You Buy, Hold or Sell?
