Netflix down 60% YTD: buy or sell?

Netflix Down 60% YTD: Buy or Sell?

Netflix, the world’s leading streaming service, has had a rough year so far. The company’s stock has plummeted by 60% year-to-date, leaving investors wondering whether it’s time to buy or sell.

The COVID-19 pandemic has been a double-edged sword for Netflix. On one hand, the lockdowns and social distancing measures have led to a surge in demand for streaming services. On the other hand, the pandemic has disrupted the production of new content, which is the lifeblood of Netflix’s business.

The company’s Q2 earnings report was a mixed bag. While Netflix added 10.1 million new subscribers, beating its own forecast of 7.5 million, the company’s revenue and earnings per share fell short of expectations. The company also warned that the surge in subscriber growth may not be sustainable, as the pandemic-related boost may be temporary.

So, should investors buy or sell Netflix stock at this point?

On the one hand, Netflix is still the dominant player in the streaming market, with a massive subscriber base and a strong brand. The company has also been investing heavily in original content, which has helped it differentiate itself from competitors like Amazon Prime Video and Disney+. Netflix’s content library is also diverse, with a mix of TV shows, movies, documentaries, and stand-up comedy specials.

On the other hand, Netflix faces increasing competition from new entrants like HBO Max and Peacock, as well as established players like Amazon and Disney. The company’s high debt levels and negative free cash flow are also a concern, as they limit the company’s ability to invest in new content and expand its business.

In the short term, Netflix’s stock may continue to be volatile, as investors weigh the company’s growth prospects against its financial challenges. However, in the long term, Netflix’s strong brand and content library should help it maintain its position as a leading player in the streaming market.

For investors who believe in Netflix’s long-term prospects, the current dip in the stock price may be a buying opportunity. However, investors should also be aware of the risks and uncertainties facing the company, and should consider diversifying their portfolio with other stocks and assets.