Streaming giant Netflix (NASDAQ:NFLX) reported its fourth-quarter earnings last week, on Jan. 20. The stock fell 20% in after-hours trading as investors worried about the company’s slowing growth. Although the company’s earnings per share of $1.33 came in much higher than the $0.82 analysts were expecting and revenue of $7.71 billion also met expectations, it was the subscriber growth that had analysts concerned.
To start 2021, Netflix expects to add 2.5 million subscribers in the first quarter. That’s well below the nearly 4 million subscribers it added a year earlier. The company mentioned the growing competition in the sector over the past 24 month but said that while it “may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.”
It’s been a tough few months for the stock. And even before earnings it was struggling, falling to around the $500 mark – the lowest it had been since August 2021.
The bearish activity after earnings suggests investors may be paying too much attention to next quarter’s forecast. With the business more profitable than in years past and it recently announcing price increases in Canada and the U.S., and continuing to grow around the world, this may be an attractive stock to buy on the dip. The competition from Walt Disney (NYSE:DIS) and other companies is not news and Netflix has continued to grow in spite of that. And its content is on par with those that consumers can find on HBO and Disney+. For long-term investors, Netflix could be a great pick up right now.