Stock Market Sell-Off: Is Netflix a Buy?
The markets have had an ugly year, and streaming stocks have not been among the few categories to avoid the pain. For example, Disney (NYSE: DIS) and Warner Bros. Discovery (NASDAQ: WBD) have seen their valuations drop by roughly 40% in 2022. Netflix (NASDAQ: NFLX) has experienced an even deeper decline in its stock price since the beginning of the year, but there are some signs that the company remains a good long-term bet.
The first quarter of 2022 was dismal for Netflix, as its subscriber base started to shrink. Management said it would start cracking down on users who share their account logins with people outside of their household -- something investors had long wanted the company to do. Netflix has not disclosed how many subscribers are sharing their logins, but a study by Leichtman Research Group published earlier this year indicated that 33% of U.S. Netflix accounts are used by multiple households.
Netflix has rolled out two pilot schemes, both designed to charge users extra for the privilege of sharing their account details with others. The first test is operating in Chile, Costa Rica, and Peru, where some customers are asked to pay an extra fee if the company detects an account being used in more than one location. The second program monitors the Netflix app on smart TVs across Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras. This time, the definition of a household was defined more strictly as a physical location. Again, if the company finds a login is being shared across two households, the account holder will be subject to an additional charge.
Source Fool.com
