NFLX Stock is Down 40% From Highs on Increased Competition

NFLX stock

Over the course of the past decade or so, streaming giant Netflix Inc (NASDAQ:NFLX) has proven to be one of the best-performing stocks in the market. Its innovation and relentless growth made NFLX stock a ‘must-own’—until very recently, that is.

2019 has not been a great year for Netflix, as the company showed signs of weakness, and that naturally got projected on to the stock performance as well. From last summer’s highs of $423 a share, NFLX stock is now down by about 38%, and hence, it is important to look closer at this stock before making any moves.

Increased Competition

There was a time when Netflix was the only streaming option for all, and hence, the company dominated that space completely. However, competition is going to come to this space this year in the form of streaming platforms from Apple (NASDAQ:AAPL) and Walt Disney Co (NYSE:DIS). Moreover, Amazon’s (NASDAQ:AMZN) Prime Video is already here, and it’s going to invest more on content in the coming months.

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Netflix CEO Reed Hastings stated recently that the launch of the platforms by Apple and Disney in November will create a ‘whole new world’ in terms of competition.  Additionally, Apple TV+ is going to be available for $4.99 a month while Disney’s service is going to cost a customer $6.99 a month. Both packages are cheaper than Netflix’s cheapest plan worth $13 a month.

At the time of writing NFLX stock is up 1.30% at $266.42.

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Weak Subscriber Growth

However, the rise of competition is not the only concern for the company. The company’s subscriber growth actually went down this year for the first time in eight years. It is believed that the fee hike was the prime factor behind slower growth. Netflix had projected subscriber growth to the tune of 5 million, but the actual growth stood at only 2.7 million.

Subscriber growth is the most important factor behind the company’s future, and the recent development must have come as a shock to many investors. NFLX stock investors might feel that Netflix’s history of tackling challenges might win the day in the end, but it is important to note that there are significant threats to the company at this point.

Featured image: DepositPhotos © Mactrunk