What happened
Media-streaming stocks soared on Friday, inspired by Netflix (NFLX +2.67%) and its impressive fourth-quarter earnings report.
Netflix paved the way for the streaming industry's outperformance today with a peak gain of 8.9%. Live sports specialist fuboTV (FUBO +0.00%) jumped even higher, topping out at 10.7%. Streaming technology expert Roku (ROKU 0.93%) rose as much as 4.8% before backing down to a 2.8% increase by 2 p.m. ET, while Amazon (AMZN +5.43%) is on an upward trend at the time of writing with a 3% gain so far.
Other media stocks with streaming ambitions posted smaller gains in the 3% to 4% range.
To put these gains of mostly mid-single-digit percentages into perspective, the S&P 500 index was up today by a much smaller 1% increase.
NASDAQ: ROKU
Key Data Points
So what
Netflix's solid report breathed new life into a streaming industry in dire need of some good tidings.
Including today's modest jumps, every stock mentioned above is still down more than 30% since the sector's woes started a year ago. Of course, the downturn also started with a fourth-quarter report from Netflix, as subscriber growth ran into a brick wall and investors across the sector feared that the days of rampant growth in streaming services could be over. fuboTV and Roku took particularly hard slams from those projections of slower growth. These two stocks are down by 82% and 69%, respectively, since that fateful Netflix report in January 2022.
Again, for a sense of perspective, the inflation-based concerns across the broader market drove the S&P 500 13% lower over the same period.
NYSE: FUBO
Key Data Points
Today's market-moving Netflix data showed a robust return to subscriber growth and positive cash profits. Management holds up top-line revenue growth as the most important metric to watch nowadays, and that metric improved by 1.8% year over year. In addition, the reported $7.85 billion was right in line with analyst projections and slightly ahead of management's guidance of $7.78 billion.
More to the point, Netflix's management sounded confident about future growth.
"2022 was a tough year, with a bumpy start but a brighter finish," the earnings release said. "We believe we have a clear path to reaccelerate our revenue growth."
NFLX Revenue (Quarterly YoY Growth) data by YCharts
Now what
Fresh acceleration of stagnant revenue growth sounds extremely welcome to investors in the streaming sector. Achieving that modest goal could turn the bears away again, clearing the path to long-term gains in financial results and shareholder returns.
Roku and fuboTV are especially hungry for an upturn, given their dramatic price cuts in 2022. For Amazon, the Prime Video service is more of a side gig than a core business -- but one the company takes seriously and invests billions of dollars in, nonetheless.
Investors in streaming stocks should keep an eye on upcoming earnings reports across the sector. More data points could confirm that what's good for Netflix should be good for the industry as a whole, or they might show that Netflix is pulling away from streaming rivals.
