The reason why this Q1 report has such an impact is that this is the first time that the number of paid subscribers for Netflix has dropped by an amount of 20,000. Which is a 43.09% drop just in 6 trading days. Since the release on April 16th, 2022, Netflix decreased all the way from 348.61 dollars to 198.4 dollars. The recent quarterly report sent investors to the exits. This is part of why Netflix’s stock price has dropped from its peak back to the fiscal report date, as shown in the graph illustrated below. Thus, as the Fed’s interest rate is expected to increase, investors are going to decrease the anticipated value of their stocks. However, a company like Netflix is not paying a dividend soon, and the further away the dividends are being yielded, based on the discounting formula, the bigger its impact on the current stock price. The fundamental value of any stock is the sum of the discounted future cash flows – which is dividend yields. Meanwhile, since the inflation rate and CPI were higher than expected, there was also evidence that the Federal interest rate will continue to increase. In terms of monetary policies, the FED increased its degree of tapering on December 15th, 2021, which was meant to combat inflation (Investopedia). The decrease in the stock value of Netflix is a complex effect of monetary policies, consumer behaviors, and the change in the company’s fundamental values. Just as every single stock had reached its peak, Netflix’s stock price soon started to suffer from the FED’s change in monetary policies as well as the shrinkage of its fundamental values. Netflix reached its peak on October 25th, 2021, with a closing price of 690.31 dollars, and had been around the same level until November of 2021. The market was afraid that a similar crash might happen as in 2020, which again boosted the stock price of Netflix and all Covid-friendly stocks. This information was further processed by the market and led to a new wave of price increases for technology and information service stocks that saw their business benefit during Covid. However, the Delta variant entered the United States’ territory and experienced significant growth starting July of 2021. It stayed almost a whole year until August 2021 as the economy generally started to recover, as the graph shows below (Yahoo Finance).
As a result, Netflix reached its relatively high price on July 6th, 2022, with 548.73 dollars. At the same time, as the FED issued their stimulus plan to boost the economy, all the stocks went through fast growth, including Netflix (Investopedia). However, this rise has an underlying assumption that all traditional industries would suffer, and it would be hard for them to recover from the pandemic. Such as banks, and after the market showed fears toward traditional investing areas the leading technology companies’ stock prices began to rise (Forbes). As Forbes concluded, COVID-19 led to serious concerns over traditional investment areas. At that specific point in time, listed in the graph below, Netflix had a stock price of $353.16 (Yahoo Finance). The very first case reported by the CDC, was on January 20th, 2020 (CDC). A lot of stocks became valued differently since the beginning of Covid-19.
0 kommentar(er)
