The clock is ticking on 2020, and Netflix (NASDAQ:NFLX) investors can't complain. Shares of the leading premium streaming service provider have risen 49% through Tuesday's close, fueled by another year of healthy growth and a platform that has made the most of the new normal by entertaining a growing number of folks who are spending more time at home than usual.

Next year might not be as kind. Rivals are starting to heat up, and a recent price hike may make Netflix more expendable. The emergence of viable vaccines and treatments for COVID-19 may find us hungry for a return to entertainment outside of the home. We also can't dismiss the reality that Netflix stock isn't cheap by most conventional measuring sticks. This year has been great for shareholders. We may not be saying the same thing about 2021. 

A woman curled up on a couch thumbing through a remote as she watches TV.

Image source: Getty Images.

The crown

Netflix has historically moved higher on odd-numbered years. It was the S&P 500's biggest gainer in 2013 and 2015 with triple-digit gains each time. It trounced the market with its 55% pop in 2017. Last year's 21% gain was pedestrian by previous odd-year standards, and actually lost to the market's nearly 30% return. 

There will be challenges in 2021. Let's start with the 800-pound Dunder Mifflin fan base in the room. Netflix will lose The Office in January. The cult-fave sit-com will stream exclusively on NBC's fledgling Peacock platform after this year. It lost Friends to HBO Max earlier this year.

Netflix no longer corners the market on premium streaming success. Several major media stocks including Walt Disney, Apple, Comcast, and AT&T have jumped into the market in the past 13 months, and that includes Disney+, which has amassed 73.7 million subscribers in its first year of service. There's no denying that Netflix still wears the crown when it comes to being the ultimate streaming kingmaker. It's no surprise that The Queen's Gambit and the latest season of The Crown were trending in November. Netflix has a huge advantage over the competition in both the size of its digital audience and the data it has collected on their streaming preferences. 

However, we can't just ignore that Netflix did raise its monthly rate last month for U.S. subscribers. The 8% increase may not seem like much -- and the market initially applauded the late-October move -- but Netflix growth took a hit the last time it boosted its prices. The early 2019 pricing increase and Netflix subsequently falling woefully short of its account growth targets in back-to-back reports explain why the stock lost to the market last year. Since then we've seen the arrival of Disney+, Apple TV+, HBO Max, and Peacock. Will a royal flush beat a full house?

The bullish counterargument here is that Netflix finds a way. Streaming services are also reasonably cheap enough that most consumers are subscribing to several services. Netflix is a hit factory through thick and thin, and it has thrived this year even as we're several months deep into a recession. 

I'm not selling my shares of Netflix, but I'm heading into 2021 with a guarded approach. Revenue and subscriber growth should decelerate next year. Unlike the big gains of 2013, 2015, and 2017, it wouldn't be a shock to see the stock underperform the market the way it did in 2019. An outright crash seems unlikely. Streaming is here to stay. However, the year ahead could prove challenging to the top dog in this suddenly crowded market. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.