January's Market Magic: S&P 500's Bullish Ride and Netflix's Earnings Surprise
Thursday, Jan 2, 2025 12:47 pm ET
As the first trading month of the year kicks off, history suggests investors could be in for a bullish ride. The S&P 500 index, tracked by the SPDR S&P 500 ETF Trust (SPY), has a long history of positive performance in January, chalking up gains in 58 out of the past 97 years and marking a solid win rate of about 60%. According to Seasonax data, the index boasts an average return of 1.12% and a median return of 1.62% in the first month of the year. The best January on record came in 1988, when the index skyrocketed 12.17%, while the worst January hit during the Great Recession in 2009, with a sharp loss of -11.41%. Despite occasional setbacks, the odds have historically tilted in favor of gains as the calendar turns to the new year.
One stock that has repeatedly delivered astonishing gains in January is Netflix Inc. (NFLX). Over the past 20 years, the streaming giant has delivered positive returns in 15 out of 20 Januaries, boasting an average return of 12.64% and a median return of 13.47%. The trigger for this stellar performance is often the company's fourth-quarter earnings release, typically announced in the second half of January. Netflix's earnings reports often set the tone for the stock's performance, with the company exceeding analysts' estimates in recent years. In January 2024, shares of Netflix surged by 10.7% following the release of its fourth-quarter earnings, continuing a pattern seen in previous years. In 2023, the stock jumped 8.46% after earnings, while in 2021, the post-earnings rally was even more dramatic, with Netflix soaring by a whopping 16.85%. Netflix's best January on record came in 2013 when the stock soared by nearly 80%. However, it's important to note that there have been instances where Netflix's stock has declined following its earnings report, such as in 2022 when shares plummeted by -28.5%.

As investors reboot their portfolios in the new year, they may want to consider the historical trends of the S&P 500 and Netflix. While past performance is not indicative of future results, the strong track record of these two investments suggests that they could be worth watching in January and beyond. By staying informed about market trends and keeping an eye on key earnings reports, investors can position themselves to capitalize on potential opportunities in the new year.