‘Squid Game’ Stock Spikes After Netflix Announces Second Season — Should You Buy?

Mandatory Credit: Photo by Pavlo Gonchar/SOPA Images/Shutterstock (12531541t)In this photo illustration a Squid Game television series logo streaming on Netflix is seen on a smartphone.
Pavlo Gonchar/SOPA Images/Shutterstock / Pavlo Gonchar/SOPA Images/Shutterstock

Netflix announced June 12 that its hit series, “Squid Game,” will be returning for a second season. Following the announcement, Bucket Studio Co., which holds a stake in the agency representing the series’ lead actor, jumped 24% in Seoul on June 13 amid a broader selloff in Asian stocks, Bloomberg reported. However, it didn’t help shares of Netflix, which were down 3.6% in pre-market trading on the same day.

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“It took 12 years to bring the first season of ‘Squid Game’ to life last year. But it took 12 days for ‘Squid Game’ to become the most popular Netflix series ever. As the writer, director, and producer of ‘Squid Game,’ a huge shout out to fans around the world. Thank you for watching and loving our show. And now, Gi-hun returns. The Front Man returns. Season 2 is coming,” writer and director Hwang Dong-hyuk wrote in a letter posted to Netflix’s site.

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The announcement might also help boost shares of the embattled Netflix. The pandemic darling posted extremely disappointing earnings on April 19, revealing it lost 200,000 paid subscribers in the first quarter, which triggered the stock to drop 27% (to a three-year low) in pre-market trading April 20.

Shares of Netflix are down 69.3% year-to-date and were down 3.2% in pre-market trading on June 13.

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In a letter to shareholders in April, Netflix acknowledged that its revenue growth has slowed considerably as its relatively high household penetration — when including the large number of households sharing accounts — combined with growing competition is creating revenue growth headwinds.

Peter Cohan, a senior lecturer at Babson College and author of “Goliath Strikes Back,” told GOBankingRates that, “with 1.65 billion hours of viewing in the first four weeks, ‘Squid Game’ is Netflix’s biggest TV show ever. So it comes as no surprise that it would be renewed for a second season.”

“I am surprised that it will take until later 2023 for it to be released. Investors do not seem favorably surprised by the news — Netflix stock is down nearly 4% in pre-market trade,” he said.

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In terms of the long-term outlook for the stock, it will depend on Netflix’s ability to add new subscribers at a rapid clip, Cohan added. “And I do not think season 2 of ‘Squid Game’ will be enough to do that. It’s possible that many ‘Squid Game’ fans canceled their subscriptions and they may renew for a month to watch the next season — then cancel again,” he said.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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