The competitive landscape has weighed heavily on Netflix Inc. investors.
By squeezing its price target on Netflix
NFLX, + 0.98%
shares for $ 300 from $ 380, Evercore ISI analyst Vijay Jayant said on Monday that investors are upset over Netflix & # 39; s business model with "a number of new TVs Internet services from well-capitalized competitors in the coming months. ”
The scarcity is scary: Walt Disney Co.
DIS, + 0.94%
AAPL, + 1.19%
AT&T Inc. & # 39; s
T, + 0.85%
HBO Max, Comcast Corp. & # 39; s
CMCSA, + 0.41%
NBCUniversal, Amazon.com Inc.
AMZN, + 0.02%
and Roku Inc.
The first hint of what this means for Netflix and its investors could come October 16, when Netflix reports third-quarter revenue.
The great success story of the genre has lately been a cautionary tale about the consumer's visual habits and the cyclical nature of the hit shows. Netflix shares have plunged about 25% since July 17, when they revealed disappointing numbers of people signing up for the service. Netflix added 2.8 million net new international subscribers, but lost 126,000 US customers in the quarter ending June. Conversely, Wall Street expected 352,000 domestic customers and 4.8 million new viewers overseas.
Read more: Netflix share drops more than 10% as revenues show a large decline in new subscribers
"While we have been competing with many people over the last decade, it is a whole new world that launches in November, CEO Reed Hastings said on Netflix at the Royal Television Society conference in Cambridge, England, last month, according to Variety. "It will be tough competition."
But with tremendous subscriber leadership and a complete programming schedule, Los Gatos, the California-based company, relies heavily on a popular TV franchise and the presumptive Best Picture Oscar front runner. "El Camino: A Breaking Bad Movie" debuts this month, and "The Irishman "will be on Netflix November 27 after a small limited run in theaters.
Meanwhile, Netflix has suspended content agreements with Duffer Brothers, creator of" Stranger Things "for nine characters;" Game of Thrones "creators Da by Benioff and D.B. Weiss for reported $ 200 to $ 300 million; and "Grey's Anatomy" and "Scandal" creator Shonda Rhimes for more than $ 100 million.
Netflix reached a five-year deal worth at least $ 500 million to offer all episodes of "Seinfeld," which began in 2021.
Netflix has predicted up to 750,000 paid subscriber extensions in the third quarter, with results scheduled to be released on October 16. Netflix is the market leader, with around 60 million domestic and 91.5 million international subscribers.
For the near future, Netflix's dominance seems safe. By 2021, however, things could get dicey, says Needham analyst Laura Martin. She expects a price war worldwide as that will force Netflix to lower its subscription fees from $ 9 to $ 16 a month. The company risks losing 5 million to 10 million of its 60 million US subscribers by 2020 if it does not work soon, she warned in a note October 3.
Netflix shares gained 2.3% so far this year, while Nasdaq Composite Index
COMP, + 0.31%
has climbed 20% and the S&P 500 index
SPX, + 0.21%
has collected 18%.