Get insights into Netflix’s latest quarterly report and 2024 outlook, with a focus on ETFs that have higher exposure to the company’s stock.
In the first quarter of 2024, Netflix confirmed its leadership in the streaming sector, registering a number of new subscribers that exceeded all expectations. With an increase of 9.3 million new subscribers compared to the 4.84 million expected by analysts, the company has demonstrated an impressive ability to attract and retain users despite growing competition. This period marks a notable recovery for Netflix, which just two years ago seemed to be losing ground to new entrants into the streaming market. In this article we will analyze the performance and prospects of the stock in 2024, highlighting in detail the ETFs with greatest exposure.
Netflix Financial Performance
Netflix’s financial performance in the first quarter of 2024 reflected the expansion of its user base. revenue grew by nearly 15%, reaching $9.3 billion, while operating profit saw an increase of 28%, reaching $2.6 billion.
Even more impressive was the increase in net profits, which recorded a jump of 77% compared to the previous year, with $2.3 billion earned, equivalent to $5.28 per action. These results not only exceeded expectations, which were stable at $4.52 per share but also sent a strong signal to the market regarding the solidity and resilience of Netflix’s business model.
Despite these positive results, the company expressed caution for the second quarter, forecasting revenue slightly below analysts’ expectations, with a projection of $4.49 billion versus the $4.54 billion expected. This led to some concerns among investors, reflected in a share price decline of more than 4% in after-market trading.
Stock Market Impact
Market reaction to Netflix’s performance has been mixed. On the one hand, the immediate drop in share prices post-results announcement highlighted the market’s sensitivity to short-term expectations. On the other hand, it is important to highlight that Netflix has added approximately $112 billion to its market capitalization in the last six months, an increase of almost 30% since the beginning of the year, making it one of the top of the S&P 500. The speed with which the stock has approached its all-time highs, exceeding $600 per share, demonstrates long-term confidence in its growth potential. Furthermore, the optimism of analysts, who recently revised their price targets up to $700 per share, suggests that the long-term outlook for Netflix remains robust despite short-term fluctuations.
In conclusion, although the outlook for the next quarter may appear uncertain, the overall strength of Netflix’s financial results and its position as the undisputed leader in the streaming industry continue to offer an attractive opportunity for long-term investors.
ETFs with Greater Netflix Exposure
Exchange-traded funds (ETFs) that include Netflix among their top holdings offer investors a unique opportunity to benefit from the streaming giant’s growth.
1. The iShares S&P 500 Communication Sector UCITS ETF USD (Acc) is one of the most relevant ETFs in this context, replicating the S&P 500 Capped 35/20 Communication Services index. This index represents a cross-section of the communications services industry, including not only telecommunications giants like AT&T, but also IT and media giants like Facebook and Walt Disney, with Netflix accounting for approximately 10.80% of its total holdings.
2. Another significant ETF is the Xtrackers MSCI USA Communication Services UCITS ETF 1D, which tracks the MSCI USA Communication Services 20-35 Custom index. This index includes large- and mid-cap companies from the communications services sector, with Netflix holding a 9.66% share of total holdings. Unlike iShares, this ETF pays dividends to investors, offering a different approach to managing returns.
3. Finally, the SPDR MSCI World Telecommunications UCITS ETF deserves attention. It tracks the MSCI World Communication Services Index, covering the communications sector in developed markets globally. Netflix, with a 6.08% stake, plays a less dominant role in this ETF but is still significant given its influence on the global communications sector. This ETF reinvests dividends, contributing to compound growth on invested capital.
Investing in these ETFs may be particularly attractive for those looking to capitalize on Netflix’s growth while mitigating risk through sector and geographic diversification. Additionally, choosing between ETFs that pay or reinvest dividends allows investors to align their investment strategies with their cash flow or capital growth needs.
Conclusions
By analyzing Netflix’s trajectory and its impact on related ETFs, a clear picture emerges of the value that Netflix adds both as a single entity and as a key component of broader financial instruments. Its role in the communications and streaming sectors is all the more relevant in an era where digital consumption is growing rapidly. For investors, this means that ETFs with significant exposure to Netflix not only offer the opportunity to benefit directly from its performance but also to capitalize on the stability and growth of the broader communications sector.
The caution expressed about Netflix’s near-term prospects may make some investors nervous, but the long-term outlook remains optimistic. Considering market analyses and upward revisions to price targets, Netflix looks like a solid investment for the future. For those looking to further diversify risk while maintaining a position in a growth sector, ETFs including Netflix represent an attractive strategic choice.
| Disclaimer The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings. |
Original article published on Money.it Italy 2024-04-29 15:21:00. Original title: Azioni Netflix, gli ETF con maggiore esposizione al titolo in forte ascesa
