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Friday, November 27, 2020

The Post-Earnings Netflix Stock Tumble Suggests A Solid Buying Opportunity

Netflix stocks might have tanked in the earnings posted for Q3, but long-term still holds strong. Instead of writing off Netflix stocks, investors seem to be more interested than ever in Netflix stocks now.

The Q3 earnings showed a massive dip in the stock prices of Netflix. NASDAQ: NFLX stocks reported a revenue of 2.2 million. This was opposed to the general consensus on the guidance report that stood at 2.5 million. Combined with the previous quarter’s earnings, Netflix stocks now stand almost 7.9 million down from 2019 revenue posting. Last quarter, the online streaming giant posted a revenue of 10.1 million.

Netflix Suffers A Sub-Miss In Q3; What It Means For Buyers

Netflix stock
Netflix stock
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Many research firms are of the opinion that Netflix’s downfall is because of the fast-growing competition in the field of online streaming. Netflix stocks have taken a downturn after multiple streaming apps joined the narrative of Netflix.

However, investors are reading into this differently. Recent Netflix stock metrics have shown that the streaming giant has been going through a bullish moment when the lockdown began and people were forced indoors in the beginning of 2020. Netflix stocks were strong in the first half of 2020 and is believed to post strong figures for the full year’s earnings, despite the Q3 dip in stock prices.

As investors hope for improvement in the stock prices within this fiscal year, the dip in the price is a major attraction for institutional as well as individual investors. This is an unwarranted dip that will start its reverse course very soon making it the best place to invest in right now.

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In case of Netflix stocks, investors obsess over the subscriber numbers as in most cases, Netflix’s growth is directly related to the growth in subscriber numbers. This is because the dip in earnings in Q3 has shown a massive dip in subscriber figures but investors need to put this tumble into context.

Netflix Stocks: A Long-Term Winner

Both in Q1 and Q2, Netflix stocks have beat the consensus estimate by a huge margin. In Q1, it added 9 million subscribers and in Q2 approximately 3 million subscribers. This is followed by a meagre dip of 300,000 subscriber figures. Therefore, on a year-to-date calculation, Netflix stocks are still up by 12 million subscribers. Estimate reports on Netflix stocks show that 2020 is going to end with Netflix adding 34 million subs instead of the earlier estimate of 28.6 million.

Even though the company faces a sub-miss in Q3, the subscriber retention rates are still high along with a stable rise in the engagement rate. In all these aspects, Netflix stocks seem to be a long-term champion proving this dip to be the best buying opportunity for investors.

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