What’s The Effect Of Netflix Missing Its Subscriber Growth Target?

by Trefis Team
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Netflix stock (NASDAQ: NFLX) dropped 7.5% in just the last one week (five trading days). The stock which now trades at $505 underperformed the broader market (S&P 500) which remained flat during the week. The fall in NFLX stock price followed the Q1 2021 results of the company. Though the company managed to beat analysts’ expectations about revenue and earnings, Netflix’s global paid subscribers missed expectations by about 2.2 million. Global paid net subscriber additions for the first quarter were 3.98 million vs 6.2 million expected. To put things in perspective, the streaming giant added 8.51 million new subscribers in Q4 2020, much higher than its own forecast and analysts’ expectations of 6.06 million. For the full year it added 36.6 million subscribers, surpassing its previous record of 28.6 million in 2018. Lower subscriber addition in Q1 2021 was driven by rising competition in the streaming space along with the coronavirus pandemic making Netflix postpone some of its big-ticket content. With the number of Covid cases rising again, production and release of content is expected to get delayed further.

Now, is NFLX stock poised to drop further? We believe that there is a 52% chance of a rise in NFLX stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last ten years. See our analysis on Netflix Stock Chances Of Rise for more details.

Five Day: NFLX -7.5%, vs. S&P500 0.04%; Underperformed market

(8% likelihood event)

  • Netflix stock declined 7.5% over a 5-day trading period ending 4/23/2021, compared to a broader market (S&P500) rise of 0.04%
  • A change of -7.5% or more over five trading days is a 8% likelihood event, which has occurred 213 times out of 2516 in the last ten years

Ten Day: NFLX -9%, vs. S&P500 1.4%; Underperformed market

(10% likelihood event)

  • Netflix stock declined 9.0% over the last ten trading days (two weeks), compared to the broader market (S&P500) rise of 1.4%
  • A change of -9% or more over ten trading days is a 10% likelihood event, which has occurred 262 times out of 2511 in the last ten years

Twenty-One Day: NFLX -2.9%, vs. S&P500 7.7%; Underperformed market

(32% likelihood event)

  • Netflix stock declined 2.9% the last 21 trading days (one month), compared to the broader market (S&P500) rise of 7.7%
  • A change of -2.9% or more over 21 trading days is a 32% likelihood event, which has occurred 795 times out of 2500 in the last ten years

Out of 213 instances in the last ten years that Netflix (NFLX) stock saw a five-day decline of 7.5% or more, 111 of them resulted in NFLX stock rising over the subsequent one-month period (21 trading days). This historical pattern reflects 111 out of 213, or about 52% chance of gain in NFLX stock over the coming month.

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