Why the Netflix Sell-Off Isn’t Meaningful: The Information’s Tech Briefing

Netflix’s second-quarter results on Thursday were about as good as it gets. But you could be forgiven for missing that, given some media coverage that took its cue from the stock sell-off following the earnings report. Investors were supposedly upset that Netflix wasn’t forecasting a repeat of the rip-roaring growth in the third quarter—some even suggested this was a problem for new co-CEO Ted Sarandos.

I’m the original Netflix bear, but even to me, the focus on the sell-off is wide of the mark. Stocks typically gyrate wildly before and after earnings. Even after a 6.5% drop on Friday, Netflix shares are up 10% in the past month, nearly twice the rise in the Nasdaq. As for growth “slowing,” give me a break. As Netflix has pointed out, pandemic lockdowns prompted people who would have eventually signed up for Netflix to do so sooner. As a result, subscriber numbers jumped 15% between December and June, an acceleration from 9% for the same period a year earlier. No one would expect the company to continue posting growth at that rate given how big it already is.