The year is early, but Netflix (NFLX) shares are rocking as Wall Street gets more optimistic on a comeback year financially for the streaming beast.
Shares of Netflix are up more than 10% so far in January, outperforming the Nasdaq Composite's 2% gain. The stock is the best performing of the closely watched FAANG (Facebook, Amazon, Apple, Netflix, Google) complex, per Yahoo Finance data.
In the past six months, Netflix shares are up more than 70%.
Yahoo Finance takes a quick look at the drivers behind the move.
Wall Street's current vibes on Netflix
Earnings power may be unlocked from Netflix's new ad-tier launched late in 2022.
New executive compensation structures for co-CEOs Reed Hastings and Ted Sarandos are seen as shareholder friendly — a bulk of the compensation will come in the form of stock options.
Buzzy recent releases on Netflix include "Glass Onion," "Troll," "All Quiet on the Western Front," "My Name is Vendetta," and "Wednesday."
Netflix download trends are improving as a result of well-received new content.
One further explanation of the bullish stock move
Netflix downloads have improved in recent months amid the release of new content, JP Morgan analyst Doug Anmuth notes.
More on Netflix's outlook from JP Morgan's Anmuth
From JP Morgan's Doug Anmuth: "We believe Netflix is a key beneficiary and driver of the ongoing disruption of linear TV, with the company’s content performing well globally and driving a virtuous circle of strong subscriber growth, more revenue, and growing profit. We expect Netflix to continue benefiting from the global proliferation of Internet-connected devices and increasing consumer preference for on-demand video consumption over the Internet, with Netflix approaching 290 million global paid subs by 2027. Additionally, the recent launch of NFLX’s ad-supported tier, Basic with Ads (BWA), as well as the upcoming Paid Sharing launch in early 2023 should further help re-accelerate subscriber & revenue growth while driving high-margin incremental revenue."
A key risk heading into Jan. 19 earnings for Netflix
Given that Netflix's stock has been on fire, Wall Street is expecting a lot of good news right out of the gate in 2023. As you can see below, Anmuth highlights bullish expectations for the Street for Netflix's net customer additions for the fourth quarter.
If the company doesn't meet these lofty numbers, Netflix shares could be ripe for a pullback.
"We model 4Q net adds of 4.75 million, above NFLX’s 4.5 million guidance and consensus of 4.5 million, and essentially in the middle of investor expectations that we believe are 4.5 million-5.0 million based on recent discussions. We project 1Q net adds of 3.5 million (consensus 3.6 million) & 2023 net adds of 13 million (consensus 14 million)," Anmuth says.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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