Why Have Netflix Stock Prices Gone Up?

It is our all-time favorite place to binge-watch. It is right now the most popular platform for entertainment. Yes, we are talking about Netflix. But did you know that Netflix is as important to investors as to movie and OTT buffs? And recently, it has had a soaring jump in popularity. But why?

Netflix (NFLX) stock recently saw a record high. The streaming service has continued to gain momentum when it comes to the stock market. Its performance in the quarterly results last week has been better than ever expected.

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Netflix has taken over every major metric for finance. This has happened in its third-quarter results, in the last week. The projected sales for this quarter for Netflix stocks have come to be much ahead of those expected by the Wall Street Journal. Netflix stocks have now taken over their previous record of prices.

The analyst of Bank of America had something to say about this soaring jump in Netflix stock prices. She says that in her view, Netflix still is one of the companies in the best position with media. She also points out that Netflix has many growth drivers, according to her. She has written these statements along with a report on the surging price of Netflix stocks.

In it, she mentioned the booming advertising tier of the company. She also mentions that this is complemented by gaming, sports, and live events. In her report, the analyst her price target from previous numbers as well.However, since Netflix’s stock has been up throughout the year, this high value has also caused a few worries.

How genuine is this jump in stock prices?

Investors have been more and more interested in Netflix stocks for many reasons. The very first of these is the fact that Netflix has diversified its streams of revenue. The ad tier for Netflix right now makes for more than 50% of sign-ups. The smart marketing strategy that is taken by Netflix has led to more and more people subscribing, in all the countries where the service is there.

Other than just sign-ups, Netflix has also benefited from another important effect. In the former days of Netflix, many subscribers would be sharing their passwords with others. Now Netflix has made a crackdown on this ability of the subscribers. This can lead to fewer subscribers than quarters, which we have seen before. This will lead to future price hikes. These can offset the slowdown.

The Deutsche Bank analyst, Bryan Kraft also has something to say about this issue. He suggests that the revenue growth for Netflix in the next year should be brought about by two things. One of these is the slow subscriber growth. The other, according to him, will be a return to more normal pricing patterns.

This will happen as the company has, for the most part, made its way through the crackdown on password sharing.

Netflix has a bigger pricing power than other companies. Analysts of the Wall Street Journal have noted that a price hike will be even more helpful for stocks in the future term. According to Citi analyst Jason Bazinet, the company can raise US prices even more in the next year. This, according to the expert, is because of Netflix’s low cost per viewed hour.

Role of the Tyson-Paul Fight

Millions of people all over the world enjoy sports. So, for Netflix to grow its subscriber base, sports can be a key element. As said by Wedbush analysts, the new Tyson-Paul fight had led to Netflix getting more live event viewership. This fight was streamed on Netflix to 65 million households. The event had some streaming issues in the beginning, but it was a greatly successful stream for Netflix.

It has led to a large number of new subscribers for the platform. It has also increased Average Revenue Per User predictions. Based on that, the company has raised the price target.

Other than that, the analysts have also said that the first NFL games are also a contributing factor to the hike. Netflix’s first NFL games are going to be streamed live on Christmas. This could further increase the subscriber base.

The analysts have pointed out how the recent announcement of Beyonce’s performance will also drive more subscribers. She will be performing at halftime of the second game of the day. The game will be between the Houston Texans and Baltimore Ravens.

After this huge success, experts are suggesting that Netflix can add more live events to its programs in the future. This strategy will focus on reducing the subscriber churn for the company.This will also give Netflix more pricing power. This enhanced strategy for content along with the Tyson-Paul fight’s success has led to the large price hike in Netflix stocks.

Ending Words

After increasing fees in Japan, Netflix has also increased costs in other areas. In recent weeks, the Middle East, Africa, and even parts of Europe have seen price rises. Netflix is now also raising prices in Italy and Spain.
As competition gets stronger with other video platforms, some concerns come up. Whether Netflix will be able to maintain this successful status in stock prices becomes unclear. Other platforms like Amazon Prime Video, Apple TV, YouTube, Disney+, and others also give strong competition.

However, Netflix has already started to bend its focus on customer engagement. This has to be taken care of, other than just expanding the market share. For this, the company will be more likely to focus on targeted ads for customers. This will help to retain subscribers in the long run.

The bottom line

The reason why Netflix stocks have gone up recently can be seen from many angles. On the one hand, the company has diversified its revenue streams. This along with the crackdown on password sharing has made way for better performance. The success of the Tyson-Paul livestream has further boosted the subscriber base. Still, given the strong competition from other big platforms, Netflix should focus on customer-centric marketing for long-term growth.