To say 2022 has been a nightmare for NFLX stock would be an understatement, with investor morale at lows not seen since the initial COVID-19 crash. So why are investors running for the hills? Currently, the wider markets have lacked the confidence we say in early 2021, with inflation and geo-political uncertainty at the forefront of investors minds.
Looking internally, the companies Q1 results did also illuminate a weak short term outlook for both subscriber growth and revenues. In short, the companies vast growth during the pandemic has slowed (as expected) – however investors don’t want to hang around as the stock could be in for some more short term hurt.
Why are investors so concerned about NFLX Stock?
When it rains it pours, and the 2022 earnings season so far has been somewhat of a bloodbath – highlighting a wider concern regarding investors confidence over the coming quarters. During markets like these, investors tend to ignore the positives that are discussed in quarterly earnings. Last week, Citi analyst Jason Bazinet noted investors barely paid attention to “significant” improvements made within its business.
The analyst sees the current price as a reflection of the downside, meaning the stock price has already priced in the companies weaker guidance. However, other analysts have taken a more defensive approach noting the companies return to double figure growth will take time.
How Can NFLX Stock Bounce Back?
What interests me is that analysts have been reluctant to push their price target below the current trading price, for what its worth. However, the question remains whether Netflix can rekindle investor sentiment by maintaining a competitive edge – a difficult task with a growing number of direct competitors absorbing licensing to certain programs and films.
In the wider market, things will need to improve to reboot investor morale. With increased interest rates expected and supply chain shortages – it becomes hard to be excited about the short term outlook. If we take a look at the long term outlook, Cowen analyst John Blackledge sees revenue acceleration kicking up a gear in 2024 with advertising tiers and the monetisation of password sharing households. The analyst has a target of $325, placing the UBS valuation in the upper quartile of analysts targets.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.