Netflix investors should brace for even more bad news
For a company that has taken some serious hits to their stock price in recent months, more bad news could be on the way.
Goldman Sachs and UBS lowered their price targets for Netflix, which signaled another shift of fortunes downward for a company that had dominated the streaming market for years.
On the news of the downgrade in Netflix’s stock price target by Goldman Sachs and UBS, FOX Business analyst Robert Gray called it a “chorus of concern” about the future of the streaming service.
“Competition is coming and coming very soon. Disney Plus and Apple TV Plus are launching next month. A lot of concern about their subscriber base whether they continue to grow it unabated, particularly internationally as well as domestic,” Gray said to Stuart Varney.
Long-term, the outlook for Netflix is clouded and perhaps a bit troubling. From the recent drop in the number of subscribers to rising membership fees and increased competition, Netflix’s stranglehold on the streaming sector is becoming increasingly looser. The streaming giant is now facing a squeeze on several fronts, leading to less optimism about what was at one-time a sure-investment.
“And then, of course, there is concern about that growth because last quarter, Netflix said they lost subscribers for the first time in eight years," Gray said. "Netflix reports earnings next Wednesday.”
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The Netflix stock has been hit hard recently. A 52-week high of $385.99 over the past year has seen the stock dip in recent weeks with news of Apple, Disney and NBC launching streaming services. Netflix started trading on Thursday at $265.97, but it was showing gains throughout the day. The downward trend since mid-July, however, is undeniable.
Netflix may have scored big by signing “Seinfeld” to their programming but they paid top dollar for the move. Disney and Apple have both added major boosts to their lineup offering as well, creating enticing shows and favorites to lure viewers away from what was the only game in town. NBC landed the popular sitcom "The Office" to boost their menu, which was originally broadcasted by the network.
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Earlier this year, Netflix announced price raises for its membership.
“One of the thing they’re losing with all the new competition is pricing power, they’ve raised their prices a lot the past few years,” Gray said. “They won’t be able to do that as easily with more competition.”