A scene from Netflix’s ‘Cobra Kai.’
Mark Hill/YouTube Originals/Sony Pictures Television/Netflix
Netflix shares remain on an impressive roll. The streaming-video giant’s stock has rallied 7.5% in September and 18.4% since the end of July, crushing the returns on both most other megacap tech shares and the broad market averages.
The rally seems to be driven by a flurry of news events that demonstrate a continued commitment to aggressively drive the creation of compelling new content—and progress on the company’s emerging push into mobile videogaming as an expansion of the service.
Netflix stock (ticker: NFLX) was up 2.6%, at $614.71, in recent trading; earlier in the session it traded as high as $619, a new intraday all-time high.
Let’s review the flurry of recent events contributing to the increasingly bullish sentiment on Netflix shares.
This week, co-CEO and Chief Content Officer Ted Sarandos provided some newsy tidbits in a presentation at the Code Conference in Beverly Hills, Calif. For one thing, he provided some eye-opening preliminary stats on the debut of Squid Game, a Korean-language survival story launched earlier this month. Sarandos said Squid Game has already blown past Lupin and Money Heist as the most popular foreign-language Netflix original—and that it could become the most popular series the company has produced to date.
Sarandos also provided some fresh data on the most-watched movies and series on the service. The horror film Bird Box, for instance, generated 282 million viewing hours in the first 28 days of its release. With a running time of just over two hours, that suggests about 140 million viewings of the film. Average movie ticket prices at the box office are a little over $9—so that would be the equivalent of more than $1.25 billion in ticket sales. In 2019, to put that in perspective, just three movies had global box office receipts above that level.
The most-watched TV show by hours in the first 28 days was Bridgerton season one, which had 625 million viewing hours. The show had eight episodes, which suggests average viewership—again, in just the first four weeks—of about 78 million per episode. The most recent Super Bowl, to put that in perspective, had just under 92 million viewers.
Also this week, Netflix announced an agreement to acquire a videogame company called Night School Studio. Among other things, Night School makes a popular game called Oxenfree, which the developer describes as a “supernatural thriller about a group of friends who unwittingly open a ghostly rift.” A sequel is in the works. Netflix intends to provide games from Night School and other developers to subscribers without any additional charge, and without ads or in-game purchases. At Code, Sarandos declined to provide a specific date on when the gaming service would be offered in the U.S.
Likely also contributing to the excitement over coming Netflix content was a fan event the company held online last week called TUDUM, which sounds like an acronym but is actually a reference to the sound the service makes when the big N appears and the app loads up. (Here’s a link to a YouTube video that repeats that noise for an hour over and over again, in case you want to drive yourself mad.) The event includes trailers from coming new seasons of Ozark, Stranger Things, Bridgerton, and various other movies and series.
Last week, the company also announced an agreement to acquire the company that holds the rights to the works of author Roald Dahl, which includes properties like Charlie and Chocolate Factory, Matilda, and James and the Giant Peach. Netflix noted that it has already been developing a new TV series based on Charlie and the Chocolate Factory and an adaptation of Matilda: The Musical.
It all adds to evidence that recent concerns over light subscriber growth in the first half of the year tied to a content slate that had been impaired by production limitations imposed by the pandemic are likely to be transitory in nature.
Investors will get a fresh look at the pace of subscriber growth and the company’s outlook when Netflix reports third-quarter results on Oct. 19. For the September quarter, Netflix is projecting 3.5 million net subscriber adds, which would be up from 1.5 million in the June quarter. The company sees revenue for the quarter of $7.48 billion, with profits of $2.55 a share.
Write to Eric J. Savitz at [email protected]
