Unlike Peloton, which began sliding early in 2021, Netflix had a remarkably swift fall from grace. The streaming giant was trading at a record high just two months ago.
Of course, a company like Netflix doesn’t need a global pandemic to thrive in the long run. The streaming service has long been a growth juggernaut. Since going public in May 2002, its shares have gained more than 47,000% as quarterly revenue rose from $30 million to more than $7.7 billion.
Even though the Los Gatos, California-based company disappointed investors on Thursday, it still delivered revenue growth of 19% and more than $5 billion in profit in 2021.
“The Netflix flywheel is still working -- it is just operating at a slower pace,” said Pivotal Research Group analyst Jeff Wlodarczak. “Over time, we expect normalization in subscriber results and for the stock to work.”
The money flowing out of pandemic stocks is going into some sectors that were among the most ravaged by Covid. Energy stocks in the S&P 500, for example, have gained 15% this year, the best performance among the benchmark’s main groups.
Another question is what this means for the rest of the tech world, including companies less tied to the vagaries of the pandemic. They’re already facing slowing profit growth and pressure on valuations. The Nasdaq 100 Stock Index has fallen 9% this month, which is on pace to be the worst since 2008.
Netflix’s numbers will get more context when technology giants like Microsoft Corp. and Apple Inc. deliver their quarterly results next week.
“Brace yourself, these results cast a shadow on the rest of tech,” said Loup Ventures co-founder Gene Munster. “Until Apple reports and we hear from the Fed, the tech market will be on edge.”
--With assistance from Ryan Vlastelica.
This article was provided by Bloomberg News.