For years, Netflix Inc NFLX was one of the best-performing growth stocks and a paragon of how a company can successfully pivot — remember when all Netflix did was ship DVDs?
But last year, investors saw what can happen to a growth stock when it showed slowing growth.
In April 2022, after failing to gain subscribers in a quarter for the first time since 2011, Netflix’s stock tumbled from nearly $700 down to below $200. Since then, the stock has recovered as investors weigh the company’s decently strong cash flow, as well as the upside potential from its new ad-tier model.
What Happened: But new insights from leading alternative data provider Apptopia showed Netflix’s growth might be in question again.
According to Apptopia, downloads for Netflix’s app actually declined 3% quarter-on-quarter in the fourth quarter. This meant the Netflix app had more downloads from July to September than it did from October to December.
Apptopia also said mobile trends looked more negative than consensus expectations to add paid subscribers this quarter. It’s important to note Apptopia tracks mobile app trends which are just a few data points that can give insights into a company’s performance.
Why It Matters: Just because mobile app trends may appear weaker than expected, does not necessarily mean that Netflix's earnings will come in worse than expected.
As Netflix prepared to announce its 2022 fourth-quarter earnings on Jan. 19, the stock is trading around $324, up about 70% from the last six months.
Photo: Panorama Images via Shutterstock
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