Netflix has seen a dramatic rise and fall in the past two years as the stock accelerated in 2020-2021, but then things took a sharp move lower. Just before the pandemic set in, Netflix’s share price was roughly $390.00, and it then dropped below $300.00 during the broad market sell-off as lockdowns were introduced. It quickly became apparent that Netflix was going to remain in high demand as people were spending more time in doors as a way of avoiding the virus. By late 2020, the share price was trading around $545.00. The bullish run continued through 2021, and it traded above $700.00 in November 2021.
The wheels came off the rally in 2022 as the company showed early signs that subscriber growth would cool. For the first quarter of the new financial year, Netflix projected it would add 2.5 million subscribers, while it added 3.98 million in the same period one year previous. The poor guidance triggered a major sell off - the first massive decline the stock would endure this year. The Netflix share price took a beating again in April when the first quarter update was delivered, as traders focused on the fact that Netflix saw a drop in subscribers for the first since 2011. The company confirmed that it lost 200,000 customers in the three-month period, but it is worth pointing out that by exiting the Russian market, it lost 700,000 clients, and had it not been for that, it would have added 500,000 accounts. As mentioned above Netflix stated in January, it predicted it would add 2.5 million subscribers in the three-month period, so it was still a huge disappointment.
The rise of Disney+, Apple TV, and Amazon TV have chipped away at Netflix’s dominance in the streaming arena. Also playing into the mix is the idea of market saturation. The business had major success with its in-house content, such as Stranger Things and The Crown, so it is difficult to maintain that momentum. Creeping fears about high inflation and worries that some countries could be facing a cost-of-living crisis, has dampened consumer activity somewhat, and that is also weighing on the stock.
Year-to-date, the Netflix share price has slumped 60%. In July, it traded below $160.00, its lowest mark in five years. It has made a modest recovery in the past few months. While the stock holds above the $200.00 mark, it is possible the recovery will continue. Should the uptrend stay the course, it might encounter resistance at $250.00 or $260.00. If the longer-term downtrend continues, it might find support at $230.00 or $216.00.