Netflix Stock Sinks To Lowest Point Since March 2020 Amid Increased Competition

Topline

Netflix’s stock on Monday sank to its lowest point since the start of the coronavirus pandemic in March 2020, with investors continuing to sell shares of the popular streaming service as it faces slowing subscriber growth and rising costs amid increased competition from rivals.

Netflix CEO Reed Hastings.

Ernesto S. Ruscio/Getty Images for Netflix

Key Facts

Netflix’s stock fell nearly 3% on Monday to a low of around $331 per share—down more than 50% from a record high of around $700 per share last November.

Shares of the popular streaming service have now given up all their pandemic-era gains, falling back to the same level they were at in March 2020, at the onset of coronavirus lockdowns.

The stock saw gains in recent years—rising over 60% in 2020 and 11% in 2021—with consumers stuck at home, but as lockdowns were lifted subscriber growth has slowed with more people returning to movie theaters.

While Netflix has its own popular titles such as “The Witcher” and “Stranger Things,” the recent success of theatrical releases like “Spiderman: No Way Home” and “The Batman,” which have together raked in over $2 billion at the box office, adds further evidence to this trend.

Netflix shares recently plunged over 20% on January 21 after the company’s fourth-quarter earnings report showed a slowdown in subscriber growth, results which some analysts called “abysmal.”

The company also recently admitted in its latest earnings that increased competition from streaming rivals like Apple and Disney has started to eat into growth margins: Combined with rising production costs, Netflix was forced to hike prices in the United States and Canada earlier this year.

Surprising Fact:

Netflix forecasts just 2.5 million new net subscribers this quarter—a significant drop from the 8.3 million additions during the fourth quarter of 2021.

Key Background:

Amid the broader selloff in technology shares that has taken place so far in 2022 with uncertainty around the Russia-Ukraine conflict and the Federal Reserve’s upcoming interest rate hikes, Netflix shares have continued to struggle. With investors worrying about the platform’s slowing growth and increased pressure from rivals, the stock has fallen over 40% so far in 2022.

Contra:

One of Wall Street’s most skeptical Netflix analysts, who has famously had a sell rating on the stock for years, recently upgraded his outlook and raised his price target to $342 per share. Wedbush analyst Michael Pachter said in a recent note that though the stock isn’t likely to shoot up in the short-term, “Netflix’s first mover advantage and large subscriber base provides the company with a nearly insurmountable competitive advantage over its streaming peers.”

Further Reading:

Netflix Stock Crashes As Nasdaq Has Worst Week Since October 2020 (Forbes)

Rivian’s Stock Is Hitting New Lows After Weak Earnings—But Analysts Still Predict A Rebound (Forbes)

Amazon Is The Latest Mega-Cap To Announce Historic Stock Split, Here’s Who Might Be Next (Forbes)

Here’s How Biden’s Historic Ban On Russian Oil Will Hit The Economy (Forbes)

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