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  • Has Netflix Finally Hit A Wall? Their Share Price Just Tanked

    17 Jul 2018 by Nereesha Patel in Business, Entertainment, Lifestyle, Money, World
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    So much for ‘Netflix and chill.’

    Despite boasting top-notch shows such as The Crown and Stranger Things, the streaming giant has hit something of a wall, causing a huge dip in its share price.

    Netflix missed its own forecasts by more than a million subscribers, with more below from The Guardian:

    The company second-quarter results, announced on Monday [July 16], spooked investors and suggested the company’s explosive subscriber growth may now be slowing. Netflix shares fell 14% to $346,05 [R4 576] in after-hours trading in New York.

    For the second quarter, Netflix reported a profit of $384,3 million [over R5 billion], or 85 cents a share, up from $65,6m [R866 million], or 15 cents a share, a year earlier.

    The company blamed the surprise subscriber target miss on faulty internal forecasting.

    Well, for a company that’s misjudged its own forecast three times in the past 10 quarters, you would have thought they’d be prepared this time around.

    Nope:

    In total, Netflix said it had added 670 000 streaming customers in the US, barely more than half its anticipated one point two million subscribers. It also missed its anticipated overseas subscriber estimates by over 500 000 …

    In a letter to shareholders, Netflix said subscriber growth in the US through the first six months of this year is still ahead of the comparable period last year. But it also warned that subscriber growth in the current third quarter would likely be around five million, again below analysts’ expectations of six point three million.

    Competition is also a possible factor as to why Netflix’s subscriber growth is slowing down:

    With subscription-streaming services now becoming the dominant business model for video content, Netflix is beginning to face competition for content from rivals like Amazon and Apple.

    Netflix is expected to invest as much as $12 billion [R158 billion] on content this year, but could face growing competition in the streaming market. Apple is upping its spending on original content in video, music and publishing to $4,2 billion [R55 billion] by 2022 from $1 billion[R13 billion] this year. Amazon is expected to almost double its spending on original content from $4,5 billion [R59 billion] to $8,3 billion [R109 billion].

    Eish. Netflix could be in a deep spot of bother, huh?

    Could investments in foreign markets, and its deal with Barack and Michelle Obama to produce shows and doccies, save Netflix from a gruesome fate? Could this be the end of ‘Netflix and chill’ as we know it?

    Only time – and subscriber growth – will tell.

    Read the full article here.

    [source:guardian]

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