Should You Consider Buying Netflix Stock Before Christmas?
The recent years have seen a remarkable transformation for streaming giant Netflix (NFLX, -4.26%). By producing its own original content, Netflix has proven its mettle against traditional media companies. Furthermore, its nascent advertising business is showing promising signs, signaling a shift in its focus beyond streaming subscriptions.
Live entertainment has played a significant role in strengthening both Netflix's subscription and advertisement businesses. As a sports enthusiast, I find Netflix's focus on sports a smart move. Cable subscriptions can be expensive, and not everyone watches every channel offered, especially sports. In such situations, Netflix has presented a lucrative opportunity.
Take boxing, for instance. Rarely do boxing matches air daily, and they require extensive preparations—training, marketing, sponsorships, all of which make them pay-per-view (PPV) events. The cost can often top $80. Netflix, however, has an intriguing strategy. A few weeks ago, viewers paid using their Netflix subscriptions to watch Mike Tyson and YouTube sensation Jake Paul duke it out. While the total annualized cost might not be much different from the PPV fee, viewers now have access to future live events on Netflix without incurring additional charges.
Christmas Day is another occasion where sports enthusiasts can rejoice. The National Football League (NFL) occasionally broadcasts games on Christmas. Typically, these games air on Fox and CBS sports affiliates in the U.S. However, an exciting twist awaits on Christmas Day 2024. Netflix will be streaming the NFL's Christmas Day games globally, marking a significant milestone for both Netflix and the NFL. This deal allows for wider global reach and could attract more advertisers and subscribers.
While Netflix's stock has a forward P/E of 45, which is quite high, the company's premium seems justified. Netflix has masterfully navigated the streaming market, and the entry into live sports presents an opportunity for further growth. With live events likely to drive more subscriptions and advertising revenue, Netflix might have unlocked a self-sustaining growth engine that could lead its streaming business to the forefront of the media and entertainment industry. Following the abuzz around the NFL games and the Tyson-Paul boxing match, one could expect Netflix's stock to gain further momentum on Christmas Day. Therefore, Netflix is a promising long-term investment option, justifying dollar-cost averaging as a prudent investment strategy.
Enrichment Data:
- Netflix's Christmas Day NFL games performance broke streaming records, with an average of 24 million viewers, making it the most-streamed NFL games in history. Beyoncé's halftime performance garnered over 27 million viewers[1].
- The event contributed to Netflix's record-breaking subscriber growth in Q4 2024, adding 19 million members—the largest quarterly gain in the company's history. The content remains a significant factor in Netflix's growth[3].
- In 2024, Netflix spent $17 billion on content, aiming to spend roughly $18 billion in 2025. The lineup includes blockbusters like Squid Game S3, Stranger Things S5, and Wednesday S2[3].
- The success of live sports events led to a surge in Netflix's stock price by 11.14% on January 22, 2025, following its announcement of an ad-supported tier and impressive Q3 subscriber growth[2].
- Analysts have set bullish price targets for Netflix, with Argus setting a target of $1,040 and TD Cowen setting a target of $1,000[2].
- The success of live sports events has positioned Netflix as a leader in streaming entertainment, with robust offerings like global series hits, validating its continuous growth prospects[2].
- Netflix plans to expand its live event offerings, securing the US rights for FIFA’s Women’s World Cup in 2027 and 2031[3].
In light of its success with the NFL games and other live events, investing in Netflix's stock could be a profitable decision, as analysts have set bullish price targets for the company. Furthermore, the company's focus on finance and continuous investment in content, such as its planned spending of $18 billion in 2025, indicates a strong commitment to growth in the finance and money sectors.
With its entry into live sports and the success of events like the NFL games and Tyson-Paul boxing match, Netflix has shown that it is not only a leader in streaming entertainment but also a smart investor in finance, making strategic moves to increase revenue streams beyond streaming subscriptions and attracting more advertisers.
