(CNN) – For most of this year, Netflix shares lagged behind its big tech rivals Facebook, Apple and Amazon. This is no longer the case, in part due to the “Squid Game” which has been a huge hit all over the world.
Netflix shares were in the red through 2021 through August. Investors worry it has lost its charm as consumers switch to new streaming platforms such as Disney+, Amazon Prime Video, Apple TV+, Paramount+, Peacock and HBO Max, owned by CNN’s parent company WarnerMedia.
But Netflix, which will present its third-quarter results on Tuesday, has seen a big change in recent months as users have become addicted to the Squid Game in South Korea.
Produced a drama about game show contestants trying to survive in dangerous competitions Fantastic predictions -and my viewers- to Netflix since its world premiere in September. Netflix said exclusively to CNN Business This month, 117 million accounts have viewed the show since its inception.
Netflix shares are up 17% this year, better than Apple and Amazon, and roughly in line with Facebook’s rise so far this year. Shares of Alphabet, which owns Google, are up 60% in 2021, making it the best performer in FAANG’s group of prestigious tech stocks.
Netflix also outperforms its traditional media rivals: Disney; ViacomCBS, the parent company of Paramount+; Peacock from Comcast. and the owner of WarnerMedia, AT&T.
Netflix subscribers, the point investors will watch the most
However, the question Wall Street is asking is whether the “Squid Game” will lead to greater financial success for Netflix.
Analysts expect third-quarter revenue to rise 17% from a year ago, to $7.5 billion, and net income to rise 47% to $1.2 billion, or $1.2 billion.
But the number that investors will be watching closely is the number of Netflix subscribers. The main reason Netflix shares stalled earlier in the year was concerns about slowing user growth.
Wall Street estimates that Netflix added about 4 million subscribers in the third quarter, for a total of 213.3 million worldwide.
The company’s orientation will also be key. Analysts expect an even larger increase in users in the fourth quarter: an increase of more than 8 million to 221.4 million.
Netflix shares typically rise or fall after quarterly results due to the expectations of the company’s subscribers. There may be additional pressure on the company to provide a bullish outlook.
This is because many analysts are very optimistic about the Netflix stock. Of the 45 people covering the company, 33 have buy ratings for the stock. If Netflix’s forecast disappoints, stocks could suffer a fate nearly as violent as the unfortunate losers of “The Squid Game.”