Shares of Netflix fell 8.5% Thursday, as investors reacted to analyst projections for slowing subscriber growth after record gains last year on its password-sharing crackdown. The stock’s decline also came as the wider market declined on President Trump’s shifting decisions on tariffs against Canada and Mexico.
Other media and tech stocks seeing declines Thursday included Spotify (-7.4%), Warner Bros. Discovery (-6.4%), Roku (-6.4%), Disney (-3.6%), Meta (-4.35%) and Amazon (-3.7%). Gainers included Paramount Global (+2.2%) as well as Comcast (+2%) and Sony (+0.3%).
Market indexes were down Thursday, with S&P 500 off -1.78% and the Nasdaq Composite declining 2.61%. That came after Trump said he would suspend new tariffs on most imports from Mexico and Canada until April 2 — coming just two days after he instigated a trade battle with the two countries, announcing tariffs of 25% on the countries.
Meanwhile, in a note published Thursday morning, a team of analysts at MoffettNathason led by Robert Fishman pointed out that Netflix had its strongest period of subscriber growth in the second half of 2024 since the pandemic, adding 24 million subscribers over that time. While “it is likely Netflix has a few more quarters of strong subscriber growth driven by its content slate and ad-tier,” the analysts said, “we do expect the benefits of the password-sharing crackdown to slow.”
As of the first quarter of 2025, Netflix will no longer report subscriber numbers on a regular basis (and it had already stopped providing quarterly sub forecasts). The company has asserted that financial metrics like engagement and profitability better reflect its overall health and trajectory.
MoffettNathanson’s note on Netflix wasn’t a downgrade: The firm reiterated its “neutral” rating on the stock and its $850/share 12-month price target. But it noted that an analysis of Netflix’s total engagement statistics for the second half of 2024 translates to a 6% decline in average daily engagement per global subscriber. That “implies that the elevated level of global subscriber growth for Netflix does not represent as significant an expansion of its user base. Rather, it is leading to Netflix (very successfully) improving the monetization of its existing userbase,” the anlaysts said.
On Wednesday, Netflix CFO Spencer Neumann made upbeat comments at an investor conference, saying he expects content spending to continue to rise as the company attracts more subscribers globally and grows top-line revenue.
“We’re not anywhere near a ceiling” with respect to content spending, Neumann said. Netflix has forecast $18 billion in cash content spending this year, which would be up around 11% from $16.2 billion in 2024.