As 2024 winds down, investors are eyeing their final investment opportunities. While the S&P 500 boasts a robust 27% year-to-date surge, many are seeking a late-year boost, potentially capitalizing on the often-reliable “Santa Claus rally.” This year, one stock stands out from the crowd: **Netflix (NFLX)**. Historical data reveals a remarkable seasonal trend for Netflix, suggesting December and January could be particularly lucrative months for investors. This article delves into Netflix’s surprising seasonal strength and examines the reasons behind this intriguing market phenomenon.
Key Takeaways: Why Netflix Could Be Your December Delight
- **Exceptional Seasonality:** Netflix historically outperforms the S&P 500 between early December and late January, delivering an average return of 14.1% over the past 20 years.
- Election Year Boost: Netflix’s performance is even more impressive during U.S. presidential election years, showing no losses during this period and an average return exceeding 34%.
- Triple-Digit Potential: In its best years, Netflix has delivered returns exceeding 100%, showcasing its significant upside potential during the holiday season.
- Underlying Factors: This phenomenal seasonality is likely influenced by factors like increased holiday binge-watching, year-end investor optimism, and the broader Santa Claus rally.
Netflix’s Stellar Seasonality: By the Numbers
The data speaks for itself. Seasonax data reveals that from early December to the end of January, Netflix has historically generated an average return of **14.1%**, with a median return of **11%**. Over the past 20 years, the stock finished this two-month period in the green a remarkable **80% of the time (16 out of 20 years)**. This consistent positive performance is striking.
A Closer Look at the Returns
Let’s break down the performance further:
- Average return in positive years: +24.98%
- Average loss in negative years: -20.64%
- Best performance: +117.42% (Dec 2012 – Jan 2013)
- Worst performance: -30.71% (Dec 2021 – Jan 2022)
The sheer magnitude of these returns, particularly the potential for double-digit gains and even triple-digit gains in exceptional years, is hard to ignore. This consistent, albeit volatile, performance makes Netflix an intriguing seasonal investment opportunity.
| Start Date | Start Price ($) | End Date | End Price ($) | Profit (%) |
|---|---|---|---|---|
| Dec 2, 2004 | 1.62 | Jan 31, 2005 | 1.64 | +1.33% |
| Dec 2, 2005 | 3.96 | Jan 31, 2006 | 3.94 | -0.51% |
| Dec 4, 2006 | 4.13 | Jan 31, 2007 | 3.26 | -21.15% |
| Dec 3, 2007 | 3.40 | Jan 31, 2008 | 3.59 | +5.76% |
| Dec 2, 2008 | 3.32 | Feb 2, 2009 | 5.28 | +59.20% |
| Dec 2, 2009 | 8.43 | Feb 1, 2010 | 8.72 | +3.44% |
| Dec 2, 2010 | 27.63 | Jan 31, 2011 | 30.58 | +10.68% |
| Dec 2, 2011 | 9.48 | Jan 31, 2012 | 17.17 | +81.11% |
| Dec 3, 2012 | 10.86 | Jan 31, 2013 | 23.61 | +117.42% |
| Dec 2, 2013 | 51.99 | Jan 31, 2014 | 58.48 | +12.48% |
| Dec 2, 2014 | 50.33 | Feb 2, 2015 | 63.01 | +25.19% |
| Dec 2, 2015 | 128.93 | Feb 1, 2016 | 94.09 | -27.02% |
| Dec 2, 2016 | 120.81 | Jan 31, 2017 | 140.71 | +16.47% |
| Dec 4, 2017 | 184.04 | Jan 31, 2018 | 270.30 | +46.87% |
| Dec 3, 2018 | 290.30 | Jan 31, 2019 | 339.50 | +16.95% |
| Dec 2, 2019 | 309.99 | Jan 31, 2020 | 345.09 | +11.32% |
| Dec 2, 2020 | 503.38 | Feb 1, 2021 | 539.04 | +7.08% |
| Dec 2, 2021 | 616.47 | Jan 31, 2022 | 427.14 | -30.71% |
| Dec 2, 2022 | 320.41 | Jan 31, 2023 | 353.86 | +10.44% |
| Dec 4, 2023 | 453.90 | Jan 31, 2024 | 564.11 | +24.28% |
Data: Seasonax
Election Year Edge: A Netflix Specialty
Netflix’s seasonal strength is even more pronounced during U.S. presidential election years. In the last five election cycles, the stock has never experienced a loss between December and January. Instead, it has generated an astounding average return of **34.33%**, with a peak return of **117.4%** during the 2012-2013 cycle. This remarkable consistency in election years further reinforces the strength of this seasonal trend.
| Start Date | Start Price ($) | End Date | End Price ($) | Profit (%) |
|---|---|---|---|---|
| Dec 2, 2004 | 1.62 | Jan 31, 2005 | 1.64 | +1.33% |
| Dec 2, 2008 | 3.32 | Feb 2, 2009 | 5.28 | +59.20% |
| Dec 3, 2012 | 10.86 | Jan 31, 2013 | 23.61 | +117.42% |
| Dec 2, 2016 | 120.81 | Jan 31, 2017 | 140.71 | +16.47% |
| Dec 2, 2020 | 503.38 | Feb 1, 2021 | 539.04 | +7.08% |
Data: Seasonax
Why Netflix Is the Holiday Stock You Can’t Ignore
The consistent, albeit volatile, positive returns of Netflix during the December-January period present a compelling case for investors. Whether delivering triple-digit gains in its best years or weathering bearish periods with surprising resilience, Netflix has proven to be a valuable seasonal asset. But what drives this phenomenon?
Factors Contributing to Netflix’s Holiday Success
- Increased Holiday Binge-Watching: The holiday season is a prime time for entertainment, and Netflix is often the go-to platform for families and individuals seeking entertainment during their downtime.
- New Year Optimism: As the year ends and investors look ahead, optimism often increases, particularly for high-growth technology stocks like Netflix. This positive sentiment can drive up demand and price.
- The Santa Claus Rally: This well-known phenomenon, a positive market trend typically experienced during the final days of December and the initial days of January, provides beneficial tailwinds for many stocks, including Netflix.
In conclusion, while past performance is not indicative of future results, the historical strength of Netflix during the December-January period cannot be ignored. This seasonal trend, particularly pronounced during election years, offers investors a compelling opportunity to potentially capitalize on a unique market phenomenon. However, as always, thorough due diligence and a comprehensive understanding of the risks involved are crucial before making any investment decisions.
