Netflix and Meta Stocks May Fall Further in Q2: Is it Sell Time?

Netflix and Meta are facing a downward direction in the tech market due to valid reasons

Popular tech stocks like Netflix and Meta are experiencing severe strain – stock-wise, and credibility-wise too. They have different business models but in terms of the plunge in share prices, they are in the same boat. In Netflix's case, with the end of the COVID-19 pandemic boom and slowly diminishing stay-at-home culture, its share price has plummeted as much as 40% between October 2021 and mid-April, 2022. The problem has been compounded with many paid subscribers leaving the streaming platform and joining its new competitors which offer the same experience for a lesser price. Meta has not experienced the degree of the downfall of Netflix stock but that does not free it from vulnerability. Once known for astonishing business growth even among the Big Tech companies, it is losing users for various reasons, one major blow being the loss of Russian users because of the suspension of their services in Russia due to the Russia-Ukraine war. In this backdrop, the question is whether one should sell the Meta stock or Netflix stock to save their wallets from incurring losses in the future.

The investors' reactions are not exactly the same and one can identify three different types of reactions. First, there are investors who are bent on selling the tech stocks and are already doing so. Their 'enough is enough' logic comes from their overestimation of the potential of Netflix and Meta platforms, and they are not ready to lose money anymore through Netflix stock and Meta stock respectively. At the moment they do not see any possibility of recovery by these two firms and they have no plan to invest in them in near future. But among those investors who are selling tech stocks, there is another category, composed of those who are doing it with the hope of buy-back if and when the price of the stocks falls further, say under the US$150. The latter strategy is particularly associated with Meta stocks as a number of investors are optimistic that Meta will regain much of its earlier position in the social media world, despite competition from TikTok and SNAP. Netflix, in comparison, does not enjoy that much optimism, the reason being the growing perception that it has much less growth room than Meta. Netflix has gained the dubious distinction of being one of the worst-performing tech stocks in the S&P 500. There is another category of people who clearly assert that they will hold the Meta stock and Netflix stock for some more time as they are guided by the 'investor's sentiment', and not by the more instantaneous acts precipitated by the 'trader's sentiment'. Here too, Meta is in a far better position than Netflix, especially in Europe's tech stock market. Meta's balance sheet is far superior to that of Netflix and its business model is far diversified too. One estimate shows that the Metaverse will be worth US $800 billion in 2024, growing at 13.1% each year, which could mean a US$1.6 trillion annual value by 2030.

So even if the values of both Meta and Netflix stocks fall further in Q2, when it comes to the issue of probable selling of stocks, the two companies are not in the same position though, as they are, as mentioned at the outset. To what extent one would like to sell the stocks or would prefer to hold them depends largely on individual investors' specific orientation and long-/short-term goals.

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