For years, Netflix was the gold standard of video streaming services.
What started as an empire built on renting DVDs through the mail, Netflix grew into a $154.8 billion streaming behemoth that boasted 221.6 million subscribers worldwide.
It was a dominant source of entertainment few Americans could live without — until now.
In this episode of The Bull & The Bear, I tell you about Netflix’s recent fall from grace, and what it means for investing in other streaming services.
The Streaming Wars Catch Up With NFLX
In its this week’s quarterly report, Netflix Inc. (Nasdaq: NFLX) reported a loss of 200,000 subscribers. It was the first drop in subscribers in a decade.
It blindsided experts who expected a 2.7 million gain!
This chart from Axios paints a complete picture of Netflix’s sudden drop:
NFLX dropped 25% in after-market trading Tuesday night and Wednesday morning following the news. It closed 35% lower Wednesday afternoon.
Netflix executives would have you believe that this drop is because more people are sharing their account passwords with others. Or even that Netflix suspending service in Russia — which has around 700,000 subscribers — was a main reason for the loss.
If that were the case, Netflix would only have gained 500,000 subscribers in the quarter, which is still way off from what analysts projected.
But the underscored reason is much simpler than that. It’s all about competition.
Netflix was once a powerhouse in streaming video on demand. But years of downplaying its competition has caught up with it.
In this episode of The Bull & The Bear, I’ll show you why competition is the biggest problem for Netflix stock, and what you can do to best profit from this streaming war.
The Bull & The Bear
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. He’s also a certified Capital Markets and Securities Analyst through the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.