Is This A Do Or Die Quarter For Netflix?
If someone told you Netflix would be the worst performing FAANG stock in 2019 chances are you would have laughed. The first half of the year saw good gains for the stock, but that all evaporated with the July release of second quarter numbers. Now as we head into the release of the third quarter numbers Netflix shares are sitting up just 6.8% since the start of the year, having lost roughly 25% since the July second quarter earnings release.
It actually wasn’t earnings that hurt Netflix shares so much as it was subscriber growth. With U.S. subscriber numbers posting a surprise drop, investors became even more worried over the coming competition from Disney and Apple, both of whom will be launching their own streaming content services in November.
Now the third quarter results are considered critical for Netflix. Another disappointing quarter could keep the stock depressed well into 2020 as the worries over rising competition are sure to intensify once services from Apple and Disney are launched. On the other hand, a surprisingly good quarter could see the stock make a significant turnaround, and could keep investor pessimism at bay for the remainder of 2019.
One good bit of news is that Piper Jaffrey surveyed 1,500 current Netflix subscribers to see if they would be leaving Netflix for competing platforms. In that survey roughly three quarters said they weren’t planning on subscribing to either Disney’s or Apple’s services. The remaining one quarter who said they would subscribe to either Disney+ or Apple+ also said they won’t be dropping Netflix.
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| Netflix 6M chart |
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