Netflix Be a Stranger Stock
And just like that, 16 billion dollars of market value goes poof. Netflix will try to forget its most recent earnings release, but investors may not let it. While some market participants are running for the hills, others are chill, buying the dip!
Netflix well and truly blundered on Wednesday by fluffing its membership numbers. Although the entertainment streamer beat profit expectations, surpassed 150 million members, and grew revenues by over 25%, investors were hard to please. The market hoped the company could add twice as many new paying members, but the company blamed itself. Netflix said its line-up of content was quiet at best, and that’s what drove less growth. Regardless, the market’s never felt disappointment like this from Netflix, and now bulls and bears roam the same stock.
News of these Netflix numbers collided with a survey into Disney+, a new competitor in the streaming segment that to no one’s surprise, has rallied plenty of interest after its flywheel of 2019 movies. The survey showed the pricing power of Disney, with customers reportedly happy to pay far more than the $6.99 per month price. Amazon Prime Video also bears down on the industry meaning that as Netflix shifts from hit classics to original content, investors see this as a make or break junction for the streamer.
However, others in the market smell opportunity. Separating temporary problems from more systemic ones, the streamer has a stacked content slate for the upcoming quarter. For that reason, Netflix soon expects a reversion to healthy subscriber growth, a “long tail” content stream and a hot brand protecting it from competitors.
10% is a long way down, and the stock is unlikely to plateau at these depths. Whether this be a trap or a punch card investment, you get the feeling that something’s about to happen. Add it to your watchlist!