The Comeback of "Squid Game 2": Is Netflix Stock A Buy?

On November 27th, Netflix unveiled the latest trailer for "Squid Game 2", which immediately set off a fierce wave of discussions among global audiences across social media platforms.

 

Now, you might be wondering what kind of impact the return of "Squid Game 2" will have on Netflix's stock price and business performance. Well, let's delve into it meticulously.

On September 17th, 2021, the South Korean drama "Squid Game" made its debut on the Netflix platform. With its thrilling plot and profound social implications, it quickly became a global phenomenon.

 

Under the influence of this drama, the performance of the streaming giant Netflix once achieved "rapid" growth.

 

We can take a look at the trend of Netflix's stock price before and after the broadcast of "Squid Game".

 

 

As can be seen from the blue rectangle on the monthly chart, Netflix's stock price achieved breakthroughs both one month before and one month after the broadcast of "Squid Game". Subsequently, due to various external factors, the stock price dropped significantly. However, this is enough to prove the charm of "Squid Game".

 

According to an internal estimate by Netflix, since its premiere in September 2021, the first season of "Squid Game" has brought at least about $900 million in profit to the streaming company.

 

And this time, the appearance of the second season of "Squid Game" is expected to drive the streaming giant Netflix's already strong performance onto a brand-new accelerated growth curve.

 

At the same time, it will also test Netflix's global marketing capabilities — that is, how to attract a larger global audience to subscribe to Netflix to watch the second season of "Squid Game" as well as to catch up on or revisit the episodes of the first season.

 

The third-quarter financial report released in October showed that Netflix

added more than 5 million new subscribers worldwide in the third quarter, and all major financial indicators exceeded the general expectations of Wall Street analysts, completely dispelling Wall Street's doubts about Netflix's subscriber and performance growth rates falling into a pessimistic situation.

 

Netflix's overall revenue in the third quarter increased by 15% year-on-year to $9.83 billion, far exceeding Wall Street's expectations. The total number of subscribers at the end of the third quarter was as high as approximately 282.7 million.

 

Almost all of Netflix's new users in the third quarter came from Europe, the Middle East, Africa, and the Asia-Pacific region. However, Netflix lost some customers in Latin America for the first time since the beginning of 2023. The company also said that the number of new users in the fourth quarter will exceed that in the third quarter.

 

Netflix also predicted that through adding new members and increasing prices, its sales will grow by 11% to 13% next year, with a maximum of $44 billion.

 

And the recent trend chart of Netflix's stock price also reflects this.

 

As can be seen from the K-line chart, Netflix's K-line trend at this time conforms very much to a rising wedge.

 

The stock price has repeatedly hit new highs in the past few days. After a slight adjustment, the stock price is expected to continue to rise.

 

With the expectation of performance growth and the intensification of the "drama-chasing" effect brought by popular IPs like "Squid Game" among global audiences, it is expected to drive Netflix to increase subscription prices, thus achieving "both volume and price increases".