Nasdaq NFLX NetFlix

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WarnerMedia’s HBO Max streaming service gained subscribers through the holidays, defying the slowing pace of growth at some rival services, thanks to a programming lineup that included the revival of its popular “Sex and the City” series and newly released films such as “The Matrix Resurrections.”

Netflix (NASDAQ:NFLX) benefited significantly from the lockdowns that accelerated its subscriber growth rate. However, the easing of lockdown measures led to a sharp sequential slowdown in its paid subscriber growth rate in the first half of 2021. 

Notably, Netflix added 3.98 million and 1.54 million subscribers, respectively, in Q1 and Q2 of 2021. This compares unfavorably with the 8.51 million subscribers it added in Q4 of 2020. 

Given the slowdown in paid subscriber growth, Netflix stock underperformed the benchmark index in 2021. Netflix blamed a lighter-than-normal content slate due to production delays, and the pull-forward volumes in 2020 for the slowdown in the first half of 2021.  

What’s Ahead in 2022?

Netflix expects a stronger content slate to boost its 2H21 performance. Notably, it benefitted from its solid content slate in Q3, as reflected through a sharp sequential growth in its net additions. 

Looking ahead, Netflix expects its Q4 content slate to be strongest, implying that investors can expect the positive effects on its financial performance. 

Netflix expects to add 8.5 million paid members in Q4, reflecting a sharp quarter-over-quarter increase from 4.38 million net additions in Q3. 

It’s worth noting that Netflix is scheduled to announce its Q4 financials on January 20, and investors have been accumulating its stock.

Taking note of Netflix’s underperformance, Brian White of Monness stated that it “felt the brunt of difficult YoY comparisons in 2021.” However, White is bullish about Netflix’s prospect. 

The analyst stated that “Netflix expanded its capabilities into new areas such as gaming and demonstrated what is possible on its platform with the runaway, global hit in Squid Game.” Further, he remains upbeat about Q4 content slate. 

While Netflix will likely benefit from the higher paid net additions, its margins will take a hit from the big content releases in Q4. 

Looking ahead, for 2022, White expects Netflix to benefit from paid subscribers growth and higher engagement. Moreover, he believes Netflix’s “stock can make up for lost time.”

Wall Street’s Take

Given the uncertainty, Wall Street analysts are cautiously optimistic about Netflix stock. Its Moderate Buy rating consensus is based on 23 Buys, 4 Holds, and 3 Sells. Further, the average Netflix price target of $677.50 implies 14.6% upside potential to current levels.

It’s worth noting that Netflix is scheduled to announce its Q4 financials on January 20, and investors have been accumulating its stock. TipRanks’ Stock Investors tool shows that about 2.8% of investors holding portfolios on TipRanks have raised their stake in NFLX stock in the last 30 days.

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Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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The Dow and the S&P 500 were set for a record open on Tuesday as worries about the Omicron variant of the coronavirus subsided and travel stocks bounced, while Ford gained on upbeat electric pickup production forecast.

The coronavirus pandemic is causing supply chains disruptions worldwide. People who get sick with COVID-19 are forced to quarantine at home, and with more than 1 million people worldwide testing positive daily, employers are short-staffed.

U.S. stock index futures rose on Tuesday, extending a strong start to the year after worries about the Omicron variant of the coronavirus subsided and travel stocks bounced.

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Netflix (NASDAQ: NFLX) stock trailed the market through most of 2021, but shareholders might have a brighter year ahead. Sure, the subscription streaming video leader isn't growing as quickly as it was during the early phases of the pandemic, or even before COVID-19 placed new pr

Dozens of high-growth stocks have plummeted in 2021, among concerns about continued success following a pull-forward in 2020. Most of the stocks that have fallen are still very high-quality businesses, so there are plenty of deals for long-term investors to take advantage of.

Shares of video streaming-giant Netflix (NFLX) closed out 2021 with quite a nasty correction, plunging by around 16% before bouncing back modestly.

As strong a year as it's been for Netflix, its stock was not spared from the recent bout of broader weakness in the tech sector. Still, as a proven FAANG name with few dents in its armor, the year-end pullback may be more of a buying opportunity than a cause for concern.

Up 17% year-to-date (2021), Netflix has been a steady performer. Still, the name has been outpaced by the broader S&P 500. Indeed, Netflix needed to let earnings catch up to its hefty multiple, as investors look to brace for what could be a trio of rate hikes in the new year.

Netflix May Have a Wide Moat, After All

Realistically, there are so many "plus" video-streaming services that it's hard to keep track nowadays. Still, Netflix has done a magnificent job of holding its own in video-streaming, even with the rise of new rivals across all corners of the media and tech space.

In terms of quality and quantity, nobody does it better than Netflix. Although, Disney (DIS) and its Disney+ service could give the streaming giant a better run for its money in 2022, with what appears to be a robust line-up of releases coming out of its pipeline.

While Netflix retains the video-streaming crown, one can only wonder what the company will look like once the metaverse is ready for prime time. Indeed, people will always have time for great films and TV shows. Still, the video viewing time of the average consumer may be challenged with the rise of next-generation virtual and augmented reality experiences that will accompany the rise of the metaverse.

Does Netflix have a plan to adapt to the age of the metaverse, as video viewership looks to become more challenged with time?

With recent video-game investments, I think Netflix is far better prepared than most other tech companies for the transition into the metaverse. As such, I remain bullish on NFLX and view the recent year-end dip as a great chance to add to a position.

Is Netflix Really Ready for the Metaverse?

Arguably, video gaming will be one of the biggest attractions of the metaverse. With the acquisition of various small-scale video-game developers, it seems like the managers over at Netflix already have their sights set on the next significant technological shift. Netflix is an innovative tech company and a streaming pioneer, after all. Although it is easy to forget such, as many of us now take video streaming for granted.

Netflix isn't just scooping up video game studios to potentially improve its metaverse-transition prospects. A few months ago, Bloomberg reported that the streaming giant hired former Meta Platforms (FB) Oculus executive, Mike Verdu, as its vice president of game development.

Grabbing one of the top execs from the company that brought the metaverse to the front of the headlines is bound to get any firm's secretive metaverse ambitions noticed.

For now, many are likely to discount Netflix's gaming and metaverse push. The company currently has a small number of mobile game offerings for its subscribers. That said, a few mobile games could be the first step towards a vast library of interactive virtual experiences in the metaverse.

What About Video in the Metaverse?

The metaverse isn't just going to be a place to game. It's a compelling medium for next-generation entertainment as well.

Indeed, interactive "choose your own adventure" experiences similar to Black Mirror: Bandersnatch could be a hint of what to expect from Netflix in the metaverse.

Perhaps such an immersive experience sounds far-fetched today, but if there's a firm with the technical capabilities to bring such an experience to us, it's Netflix.

Wall Street's Take

According to TipRanks’ consensus analyst rating, NFLX stock comes in as a Buy. Out of 30 analyst ratings, there are 23 Buy recommendations, 4 Hold recommendations, and 3 Sell recommendations.

As for price targets, the average Netflix price target is $677.50 , implying an upside of 12.5%. Analyst price targets range from a low of $342.00 per share to a high of $800.00 per share.

The Bottom Line on NFLX Stock

Netflix CEO Reed Hastings is also no stranger to making high-stakes moves, and I think Netflix is a company whose expertise will translate very well into the metaverse. At the end of the day, Netflix is an entertainment company that's well aware of what the metaverse has to offer.

Disclosure: Joey Frenette doesn't own shares of any mentioned companies at the time of publication.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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