Topline
Netflix’s debut as a major sports broadcaster is poised to capture Wall Street’s attention, adding to an already impressive year for investors as the streaming giant continues to rapidly increase its profits.
Key Facts
Netflix has secured the national broadcast rights for two NFL games on Wednesday: the Kansas City Chiefs vs. the Pittsburgh Steelers at 1 p.m. EST and the Baltimore Ravens vs. the Houston Texans at 4:30 p.m. EST. The event will feature performances by pop stars Mariah Carey and Beyoncé.
These football games represent a significant live advertising opportunity, with the potential to enhance “scale & monetization into 2025” for Netflix’s ad-supported subscription tier, according to JPMorgan analyst Doug Anmuth in a recent note to clients.
This high-profile Christmas event comes as Netflix has seen robust performance on the stock market, bolstered by its record financial achievements this year.
As of Tuesday, Netflix stock has surged by 91% year-to-date, positioning it for its best annual performance since 2015.
This impressive 91% rally ranks Netflix as the 13th-best performing stock on the S&P 500 index. Among American companies valued at $200 billion or more, it trails only artificial intelligence leaders Nvidia and Broadcom. Notably, Netflix’s gains significantly surpass those of its entertainment industry peers such as Disney (26%), Comcast (parent of NBC and Peacock, -7%), Warner Bros. Discovery (parent of Max, -7%), and Paramount (parent of CBS, -28%).
Netflix’s robust returns reflect a stellar year, marked by strong profitability amidst struggles faced by many of its streaming competitors. According to FactSet, Netflix is projected to achieve $39 billion in revenue and $8.7 billion in net profit for 2024, representing increases of 15% and 60%, respectively, compared to the record results of 2023. These projections are based on the company’s performance over the first three quarters of the year and consensus analyst forecasts for the final quarter.
Key Background
According to The Wall Street Journal, Netflix paid $150 million to secure the rights to Wednesday NFL games. This significant investment comes on the heels of the high ratings garnered by the trio of nationally televised Christmas games in 2023, each of which ranked among the top 20 U.S. broadcasts of the year. These Christmas NFL games will be the first mainstream American team sporting events to air on Netflix, marking a notable expansion into live sports for the streaming giant. Last month, Netflix broadcast a boxing match between influencer Jake Paul and 58-year-old former heavyweight champion Mike Tyson, and subsequently acquired the rights to the next two FIFA Women’s World Cup tournaments. In January, the company also announced it will air WWE’s weekly wrestling program “Raw” for a reported $5 billion over the next decade.
Big Number
7%. That’s the percentage of NFL games this season that are available exclusively through streaming services, as reported by boutique equity research firm MoffettNathanson.
Surprising Fact
Over the past five years, Netflix stock has significantly outperformed those of other traditional media and streaming services involved in the NFL broadcast business, achieving an impressive annualized return of 36%.