Written by Norman Isaac Mwambazi

Netflix stock surges into record territory as the long-awaited Money Heist drops today

Netflix Inc. (ticker: NFLX), one of the companies that benefited from the pandemic as people watched more of its shows …

Netflix Inc. (ticker: NFLX), one of the companies that benefited from the pandemic as people watched more of its shows as they were locked down, has had its stock surge into record territory as the company continues its growth.

Netflix shares rose yesterday, Thursday, September 2, 2021, to extend the company’s best-ever two-week stretch of gains into record territory. According to industry analysts, Netflix’s content slate is set to kick into gear, and investors are looking forward to betting on this growth.

Netflix’s stock is also getting a boost after tech giant Apple Inc. (ticker: AAPL) allowed developers to provide a link for users to create a paid account that sidesteps Apple’s in-app purchase commissions.

The video streaming services company saw its stock rise 1.1% to close yesterday’s trading session at a record $588.55, smashing the company’s previous record when it closed at $586.34 early this year after the regular trading session on Wednesday, January 20. Yesterday’s rise was the sixth consecutive day it did so, seven days after consecutively rising for eight days. This was Netflix’s longest straight gain since the eight-day stretch that ended more than three years ago on January 29, 2018.

To stretch that further, Netflix’s 14-day winning streak was the most for any 15 day period since the company’s Initial Public Offering (IPO) in May 2002. Over the past 15 trading sessions, Netflix shares have surged 15.2%, representing the best 15-day performance since it soared 16.3% over the 15 days ended at the height of the pandemic on September 2 last year.

Netflix’s previous record for most daily gains in a 15-day period was two, which happened in January 2018 and May-June 2014. Netflix stock is performing well in the books of Wall Street analysts, with Justin Patterson, a Director and Equity Research Analyst at KeyBanc Capital Markets, reiterating his overweight rating on the company and setting its stock price target to $645.

Although the pandemic mainly worked in favour of Netflix by helping the company register record net subscriber growth in the first half of 2020, it also dealt a few blows to the company’s business when it forced some releases to be postponed to a future date, some of which have not been released to date. However, Patterson believes that its September content line-up will have existing subscribers hooked and have others renew their subscription.

In a note to clients, Patterson wrote that Netflix’s content gets back on track in September after a light year and that subscribers are bracing themselves for the company’s improved content line-up that begins today, Friday, September 3, 2021, with the release of La Casa de Papel, also known as ‘Money Heist’ to the English audience. The long-awaited fifth season of the Spanish television series centred around a brainy “Professor” leading a team of thieves through a well-structured heist plan is one of the series whose release has been delayed. Still, its release promises an upward movement of its subscribers due to its big audience in Latin America, Africa, Europe, the Middle East and India.

“Based on Google Trends data, we believe ‘Money Heist’ is sufficient for international upside. We believe this creates a scenario where Netflix can exceed our, and the Street’s paid net add estimates of 3.5 million and 3.6 million, respectively,” Patterson wrote in the note, adding that this upside would come more from the performance of the show in countries other than the United States and Canada, where he expects paid net subscriber adds to range from 0.2 million to 0.4 million.

Over the past three months, Netflix stock has gained 20.3% outperforming the benchmark S&P 500 Index and the SPDR Communication Services Select Sector Exchange-Traded Fund (ETF), which gained 8.2% and 9.5% in the same period. However, Netflix has underperformed these two by a wide margin this year so far, with the S&P 500 gaining 20.8% and the communication services ETF gaining 26.7% year to date.

Netflix shares are moving closer to the $600 level after analysts at Citi Group estimate have been revising their forecasts to higher figures in recent weeks. Currently, analysts expect the company to report Earnings Per Share (EPS) of $10.45 in the 2021 fiscal year, and that its performance will be even better in the 2022 fiscal year as it will report EPS of $12.81, This means that Netflix shares are trading at roughly 47 forward P/E.

This estimate represents a rich valuation of the company. Still, analysts back up their estimate with the belief that today’s market is ready to tolerate even higher multiples if the company is a market leader the way Netflix is in the streaming business, and it has solid growth potential.

According to reports and popular word, Netflix shows are more popular than shows from other companies in the streaming space.