top of page
BW-2020logo.png
Writer's pictureTyler White

Netflix's Stock Soars Despite Stalling in Viewer Engagement


The buzz around Netflix is back as the stock is up an astounding 50% since the start of the year and trading at $719.70, nearing its 52-week high of $725.26.


Despite the optimistic numbers, Netflix faces a critical challenge in sustaining high and consistent viewer engagement levels. According to its latest viewership report, Netflix showed that from January to June of 2024, subscribers logged 94 billion viewing hours. Compared to last year's 93.5 billion viewing hours from the same time period.  


This report marks the first instance where investors can observe year-over-year engagement trends, which has remained stagnant despite a significant surge in subscriber numbers by 39 million in the past year. The lack of significant engagement growth leaves question marks in regards to Netflix’s pricing power - it’s ability to raise prices without losing subscribers, as consumers choose between the large number of streaming options.


A major driver of the 39 million added subscribers was the introduction of Netflix’s password sharing crackdown. The crackdown eliminated the ability to share passwords with friends and introduced Netflix Household, a feature that limited a shared account to “only devices connected to the internet at the main place you watch Netflix”. Netflix also released an ad plan, called "Basic with Ads," which costs $6.99 a month and was released on November 3, 2022. This plan is a great option as it falls significantly below Netflix’s ad-free version, priced at $15.49. 


With it facing high market expectations, achieving large growth is now a major focus for Netflix. Analysts expect that Netflix will report a 15% increase in revenue for the third quarter. Additionally, earnings for this period are projected to rise by 40% compared to last year, per Bloomberg’s latest forecasts. 


For the entire year, it’s expected that Netflix’s earnings will jump by roughly 60% to $19.08 per share, and the company’s annual revenue is forecasted to reach $38.73 billion, representing a 15% growth from the previous year.


As for Netflix’s official earnings, the announcement is scheduled for October 17, 2024.


Sources:





9 views

Comments


bottom of page