Netflix's Dominance Continues: Live Events and Sports Drive Growth
Netflix's 2024 performance may be difficult to surpass, but Wall Street remains optimistic about the streaming giant's offerings, particularly its major acquisitions in entertainment and sports.
Sports Programming Drives Success
Netflix's foray into sports programming has proven lucrative, with investors recognizing the value of live events for its advertising business. The company has achieved significant success with live sports coverage, including the popular "Squid Game."
"Live events are a significant catalyst," said Clayton Allison, portfolio manager at Prime Capital Financial. "The viewership numbers are extraordinary, opening up new revenue streams for Netflix."
Exclusive Content and Partnerships
Netflix has secured exclusive rights to content from World Wrestling Entertainment (WWE), further strengthening its sports programming portfolio. Positive commentary on these live events during the upcoming earnings call could boost the stock's performance.
Media Industry's Focus on Sports
Sports remain a key aspect of appointment viewing, driving media companies to invest heavily in sports streaming services. Direct TV has launched a dedicated sports streaming service, and Disney is merging its Hulu + Live TV service with FuboTV.
Netflix's Strong Performance Despite Challenges
Despite a rocky start to 2025, Netflix has outperformed the Nasdaq 100 index, buoyed by its 83% surge in 2024. Market analysts remain bullish, with over two-thirds tracking Netflix recommending a "buy" or equivalent rating.
Advertising and Growth Strategies
Netflix's introduction of advertising and crackdown on password sharing have reassured investors about the company's ability to generate growth. The streaming service now boasts over 70 million viewers who watch shows with advertising monthly, doubling the number from May 2024.
"Advertising is key for Netflix," said Uday Cheruvu, portfolio manager at Harding Loevner. "Its user base is highly desirable to advertisers, and improving ad monetization will drive high-margin growth without the need for constant user acquisition."
Headwinds and Opportunities
Netflix's global footprint exposes it to currency exchange headwinds. However, the company's emphasis on advertising could mitigate this impact. Market players remain upbeat about Netflix's future prospects.
"If the stock dips due to unexpected performance, it could present a buying opportunity," said Hanna Howard, portfolio manager at Gabelli Funds.