Netflix Growth Chills
Netflix had a great second quarter during the first few months of the pandemic. After all, the company is made to succeed when people around the world are forced to stay home on their couch. It brought in an incredible 16 million new subscribers in the first quarter and 10 million in the second as people binge-watched shows like the infamous Tiger King.
However, the company was not able to maintain that momentum through the third quarter. Its stock has fallen nearly 7% since it reported earnings Tuesday after an underwhelming performance. The key missed metric for Netflix was subscriber growth, with the company falling well short of the expected 2.5 million new users it forecast for the summer.
Despite the disappointing growth, Netflix remains optimistic and attributes the underperformance to the incredible first half of the year. But, others in the industry don’t think it’s that simple. Growing competition from other streaming services as platforms like Disney+ and NBC’s recent launch Peacock have worried some that Netflix may lose some of its market share.
Another emerging problem for Netflix is their inability to produce original content during the pandemic. Netflix originals drive a significant amount of viewership, so investors are concerned about the company’s ability to maintain certain subscribers if it cannot produce these shows.
Netflix is up nearly 50% on the year, so its 12% decline in the past few days should be taken with a grain of salt. Still, the many powerful names recently entering the streaming service arena could be a long-term concern for the company.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.