Netflix’s stock price is far from its peak of almost 400$, and now it faces new competition from Apple, Disney, Amazon, and more. Without a doubt, these are major league players. What can we expect from the boiling media market?
What happened so far? Well, Netflix has been selling digital subscriptions to its video library since 2007. Netflix made a significant leap during the three years from 2016-2019, due to the quality of its subscribers and international growth. According to Speed solutions LTD. experts, while the company had been at the center of the streaming media revolution, it had also led the switch from DVD rentals to the more convenient alternative we have been accustomed to, kicking out companies that couldn’t keep up with the pace. On top of that, Netflix started to create original content, and this specific strategy was, without any doubt, one of the factors behind Netflix’s success. It’s also worth mentioning that Netflix was outperforming the S&P 500 in 2018, and as a result, managed to beat the FAANGs exclusive club.
New competition is bad for Netflix?
According to Speed Solutions LTD., The entry of new competitors doesn’t necessarily mean that Netflix’s stock price is going to fall. However, since we are referring to Apple and Disney, what will eventually happen is that the company that will be offering the most attractive package at the most attractive price, simple “Money-Per-Value”, will more than likely become the crowd’s favorite.
Netflix, for its part, remains the streaming leader and expected to continue its momentum for the foreseeable future. Although its stock has taken a hit, in a recent survey of 1,500 Netflix subscribers, most insisted that they won’t be abandoning the service in favor of either Apple or Disney. It is more than likely that as Netflix continues to occupy a must-have place of prominence for many of its consumers, they might consider Apple or Disney streamers as add-ons, but not as an alternative.
The Elephant in the room
Besides the competition, which at this point doesn’t look like something that could threaten Netflix, and although the company is in significant debts, creating content is known to be a capital-intensive business. To create more engaging content, Netflix will have to continue and borrow more money, which in return will result in digging itself deeper into a cash-constrained hole. However, Speed solutions LTD. will argue that this only makes Netflix’s problem bigger. In 2019 alone, Netflix is expected to generate a cash loss of $3.5 billion.
Assuming that the company’s content continues to attract more subscribers, everything should be fine. However, the main concern with Netflix is that if it stops growing in subscriber numbers, it will more than likely won’t be able to meet its debt obligations, and will quickly throw the company into bankruptcy.
Forecast? Netflix’s has a rough road ahead, especially after the company posted mixed financial results for its third quarter. Netflix’s positive spin on its growing roster of challengers doesn’t seem to be enough for investors, who are worried that Netflix will lose its dominant market leadership position, primarily due to the oversupply of new services launching.
So how does the 2020 vision look for the stock? According to Speed solutions LTD., It all depends on how Netflix will perform against its biggest potential challengers, Apple TV+ and Disney+. It is fair to say that by January, after its two biggest competitors will have nearly two months of operations under their belt, Netflix would have to respond, but the question remains how. If Netflix falls woefully short of the 7.6 million net additions, it’s forecasting for the current quarter, and then it will be time to worry. At the moment, it seems as if Netflix will keep on winning, simply because you shouldn’t bet against it. Netflix has the tools to beat the market in any given year. With a currently “depressed” stock price, the chances are even better for it to surpass analysts’ expectations concerning its stock averages in the upcoming year.