Netflix (NASDAQ:NFLX) is taking a victory lap Tuesday morning.
The company tweeted that the much-anticipated third season of its hit show, Stranger Things, had a record-breaking debut after it premiered to rave reviews on the Fourth of July. The program, which combines a nostalgic look at 1980s' pop culture with story elements of sci-fi and horror, was watched by 40.7 million household accounts in the four days after its global launch. Netflix also said that 18.2 million have already binged their way through the entire series.
This strong out-of-the-gate performance is giving analysts reason to continue their bullish calls on the media streaming service.
A "very strong start"
Raymond James analyst Justin Patterson reiterated his strong buy rating on the stock based on what he called a "very strong start" for the third season of the Netflix favorite. He crunched the numbers and said that the record viewership implies that at least part of the series had already been seen by 26% of Netflix's worldwide subscriber base -- and that's in the first four days alone -- so the company will likely release updated metrics in the weeks to come. The percentage is based on the approximately 154 million global paid memberships the company forecast for the end of the second quarter (up from 149 million reported in Q1). Netflix is scheduled to release those results after the market close on July 17.
These viewership metrics are even more impressive given the time of year. The summer season is ripe with outdoor activities like vacations and alternative viewing options like the women's World Cup and a slew of summer movie releases.
"This illustrates that originals are resonating with consumers and finding value with binge viewing," Patterson said in a note to clients on Tuesday. "As content breadth and quality improve and drive more engagement, we see further pricing upside."
Patterson isn't the only one. Last week, Imperial Capital analyst David Miller made a bold pronouncement about the third season of Stranger Things. "The brilliance of Stranger Things cannot be underestimated and the series was constructed with the most efficient economics in mind," he wrote. "The show holds unique appeal, and is one of a very few series on any network, linear or virtual, where a whole family may be entertained simultaneously."
A little perspective
To put the performance of Stranger Things 3 into perspective, Netflix's original movie Bird Box -- released in December 2018 -- was viewed by more than 45 million accounts in the first seven days after its premiere. At the time Netflix said in a tweet: "Took off my blindfold this morning to discover that 45,037,125 Netflix accounts have already watched Bird Box -- best first 7 days ever for a Netflix film!"
Netflix has been releasing statistics on select films and series in recent months, a departure from its previous practice of keeping its viewer data close to the vest.
In the first quarter, Netflix said that 45 million member households watched mutant-superhero drama Umbrella Academy in its first four weeks on the platform. Action/heist flick Triple Frontier was viewed by 52 million households, while The Highwaymen, a retelling of the Bonnie and Clyde saga, attracted 40 million member households during its first month. The documentary FYRE: The Greatest Party That Never Happened was viewed by 20 million member households, while Our Planet was on track to be the company's most successful documentary series to date, with 25 million member households projected to watch the show in the first month of its release.
Why it matters
Netflix management has long maintained that compelling content was the key to the company's future success, which is why the streaming giant continues to spend billions on programming. A survey conducted earlier this year by Morgan Stanley found that 40% of respondents cited Netflix as the best source for original programming.
Worldwide hits like Stranger Things will continue to attract new subscribers, and keep current members coming back for more.