One of the big beneficiaries of the corona pandemic was Netflix, the streaming entertainment service from the United States.
After the Corona crash in March 2020, many investors grabbed the share after numerous analysts and media experts had pointed out the opportunities that would arise for the American streaming provider in times of lockdowns.
From prices below $ 300, Netflix shares went into high gear.
The price more than doubled in the following 20 months and marked a new record high of around $701 in November 2021.
Now the crash followed in January.
The group had caused a certain disillusionment among shareholders and investors.
The stay-at-home value
Netflix stock is currently under pressure in a number of ways.
While the expected interest rate increases are causing concern for tech and growth stocks in particular, investor interest in the corona darlings that have passed in the meantime is falling.
In addition, the competitive situation in the online streaming area is becoming increasingly difficult for the industry pioneer.
Netflix was considered a so-called "stay-at-home" value or corona profiteer.
Lockdowns, especially in 2020, have forced people to stay at home.
So that they didn't get bored, many of them took out a Netflix subscription so that they could watch their favorite films or series online at any time.
The number of subscribers shot through the roof at times.
In 2020, almost 37 million new users were added.
In the final quarter alone, their number was around 8.5 million.
Netflix had again promised such a value for the fourth quarter of 2021, but could not quite deliver: Between October and December 2021, only 8.28 million new users were added worldwide.
This increased the total number of users to 221.84 million.
Although Netflix was able to beat market expectations (the consensus was 8.19 million new users), the outlook was disappointing for some shareholders who are used to success.
Disappointing customer numbers
For the current first quarter of 2022, Netflix is only forecasting an increase in the number of subscribers of just 2.5 million. In the corresponding period of the previous year, this number was still 3.98 million, while the market had recently even expected a figure of 6.93 million. Looking at those numbers compounded the recent plunge in Netflix's stock price. It has since lost almost half its value compared to the November 2021 high of around $700.
The fact that it had to admit for the first time how the growing competitive pressure would affect the company's growth was probably particularly painful for the management.
So far, it has been emphasized that Apple or Disney would not materially negatively impact Netflix growth.
It has now been admitted that increasing competition was one reason for the recently disappointing growth.
Competition does not stand idly by
It also didn't help much to say that Netflix would grow in all markets where there would be an increasing number of alternative online streaming offers.
It is true that the change away from linear television to the consumption of online content is not yet complete.
But it's not just Netflix that offers opportunities, but all market participants.
Netflix itself still sees itself as particularly well positioned to benefit from the anticipated growth -- after all, it was particularly early on in the video-on-demand space.
It remains to be seen whether the company can really use and implement this advantage.
Without a doubt, Netflix has the biggest series of the year (Squid Game), the two biggest movie premieres to date (Red Notice and Don't Look Up), and the most Oscar and Emmy wins and nominations of any film studio or TV company important milestones were reached in the past year - but the competition is not standing by and customers can come and go again.
Analysts drastically revise price targets
According to the latest figures, many analysts have apparently changed programs. The analyst firm Jefferies, for example, gave up its previous buy recommendation and downgraded the share to neutral. At the same time, the target price was reduced from $737 to $415. This was justified by the fact that Netflix had previously assumed constant growth in subscribers. Morgan Stanley also expressed the same concern and also revised the recommendation. From the point of view of the investment bank, more than “neutral” and a target price of $450 (previously $700) is currently not possible.
Anyone who has Netflix shares in their depot should be pondering a lot at the moment.
On the one hand, a growth story that is probably still fundamentally intact, which has brought in very good returns as an investor in recent years - over a ten-year period, prices have increased by an average of 36 percent annually.
On the other hand, there is a sober chart technique that currently calls for caution.
At the moment, Netflix shares are trading well below the 200-day moving average of $560, which means that the trend arrows are clearly pointing down for the time being.
If the correction continues to widen, the March 2020 low at $290 could be targeted next.
In the event of a price recovery, on the other hand, the technical chart situation would only brighten again if the 200-day line was recaptured.