Will Slower Subscriber Growth, U.S. Recession Take Netflix Stock Down To $300?

Question: How would you feel if you owned Netflix stock (NASDAQ:NFLX) and it crashed 60%, or even 70%, in the next couple of months? Sounds extreme? It’s happened before – and it could happen again. Netflix has remained roughly flat this year after a stellar 2024, which saw the stock gain roughly 90%, led by Netflix’s crackdown on password sharing and the expansion of its advertising-supported streaming plan. However, we see multiple risks for the company in the near term given mounting macroeconomic concerns in the U.S., following President Donald Trump’s imposition of tariffs on key trading partners and also due to possibly lower subscriber additions for Netflix. We believe the stock could fall further to levels of under $300 per share. Here’s why investors need to be concerned.

Here’s the thing: in a downturn, NFLX stock could lose considerably. There is evidence from as recently as 2022 that NFLX stock lost over 70% of its value in the matter of just a few quarters. So, could NFLX’s roughly $870 stock slide to under $300 levels if a repeat of 2022 were to happen? Now, of course, individual stocks are more volatile than a portfolio – and in this environment, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.

Why Is It Relevant Now?

Netflix’s subscriber growth could slow in 2025 as key initiatives like the password-sharing crackdown and ad-supported plans have already been rolled out across major markets. These strategies likely pulled forward demand from future years, potentially leading to muted subscriber additions ahead. The company’s decision to stop reporting subscriber numbers starting in 2025 might indicate that Netflix anticipates slower growth in its subscriber numbers. See what to expect from Netflix in 2025. Through 2024, Netflix added over 40 million subscribers, bringing its paid subscriber base close to 302 million. This expansion was a major driver of the company’s stock price gains.

Growth was fueled by measures to curb password sharing, requiring users to pay for additional sharing options or create new accounts. This initiative, now active in over 100 countries, helped Netflix both attract new subscribers and better monetize existing ones. Additionally, the ad-supported tier, offering a more affordable entry point, has seen strong adoption, with over half of new subscribers in eligible regions choosing this plan as of the most recent quarter. However, with these growth levers now largely used up, Netflix may face headwinds in sustaining its momentum, which could impact the performance of the stock.

Economic uncertainty could also weigh on Netflix, which is highly dependent on consumer spending. Trump’s bold moves on tariffs, including a 20% total tariff on Chinese imports and 25% on Canada and Mexico, as well as tighter restrictions on immigration, have stoked fears that inflation could return. All of this means the U.S. economy could hit a rough spot, and even worse, hit a recession – our analysis here on the macro picture.  On Monday, during an interview, the President refused to rule out the suggestion that new tariffs could trigger a recession, causing the Nasdaq index to decline by 4%.

When factoring in heightened uncertainty from the Trump administration’s policies, these are critical risks. The ongoing Ukraine- Russia war and global trade tensions further cloud the outlook. Tariffs drive up import costs, leading to price hikes, lower disposable income, and weaker consumer spending. This is a clear negative for Netflix, which relies on discretionary income. It also doesn’t help that Netflix plans have become more expensive, with its premium plan now priced at $25 per month and the standard HD plan recently increasing by $2.50 to $18 per month. This could lead to subscriber pushback or slower new sign-ups. At the same time, Netflix’s content costs are set to rise as it ventures into live sports programming, such as NFL games and WWE wrestling. Additionally, rising competition could lead to higher churn rates or a slowdown in new sign-ups, impacting margins. These combined pressures could weigh on profitability and stock performance in the near term.

How resilient is NFLX stock during a downturn?

NFLX stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on NFLX stock? Our dashboard How Low Can Netflix Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• NFLX stock fell 72.1% from a high of $597.37 on 3 January 2022 to $166.37 on 11 May 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 27 February 2024
• Since then, the stock has increased to a high of $1,058 on 17 February 2025 and currently trades at around $890

Covid Pandemic (2020)

• NFLX stock fell 22.6% from a high of $386.19 on 19 February 2020 to $298.84 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 13 April 2020

Global Financial Crisis (2008)

• NFLX stock fell 55.9% from a high of $5.81 on 17 April 2008 to $2.56 on 27 October 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 17 March 2009

Premium Valuation

At the current stock price of almost $870 per share, Netflix trades at around 35x consensus 2025 earnings, which appears a bit expensive in our view. In comparison, the stock was trading at about 20x earnings back in mid-2022. Although Netflix’s recent financial performance has been strong, markets tend to be short-sighted, extrapolating short-term successes for the long run. In Netflix’s case, the assumption is likely that the company will continue its strong streak of subscriber additions and likely grow revenues comfortably at double digits. However, there’s a real possibility that Netflix will soon see subscriber growth cool, as the twin benefit of the password-sharing crackdown and ad-supported tiers eventually stabilize, with economic uncertainty also growing in the U.S.

Given this potential growth deceleration and the broader economic uncertainties, ask yourself the question: do you want to hold on to your Netflix stock now, will you panic and sell if it starts dropping to $300, $250, or even lower levels? Holding on to a falling stock is never easy. Trefis works with Empirical Asset Management — a Boston area wealth manager — whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index, less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

[1] Returns as of 3/11/2025
[2] Cumulative total returns since the end of 2016

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