The price of Netflix (NFLX) dropped from $380 to $300. Analyst Vijay Jayant said on Monday that investors were nervous about the Netflix business model with “a number of new Internet TV service launches from well-capitalized competitors over the coming months.
Companies that recorded big losses were Walt Disney (DIS), Apple, HBO Max, Comcast at NBCUniversal, Amazon and Roku.
The first hint of what this means for Netflix and its investors may come on October 16, when Netflix reports its third-quarter earnings.
Netflix shares have fallen about 25% since July 17, when they revealed disappointing figures on the number of people signing up for the service. Netflix added 2,800,000 as new subscribers but lost 126,000 from the United States in the quarter that ended in June. Wall Street, on the contrary, expected 352,000 domestic customers and 4,800,000 new viewers abroad.
“While we’ve been competing with many people in the last decade, it’s a whole new world starting in November. It’ll be tough competition” Netflix CEO Reed Hastings told a Royal Television Society conference in Cambridge, England last month.
But with huge leadership in subscribers and a great programming schedule, Netflix is not in immediate danger.
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Netflix has forecast up to 750,000 paid subscriber extensions in the third quarter, with results due on October 16. Netflix is a market leader with some 60 million domestic subscribers and 91 million international subscribers.
In the near future, the dominance of Netflix seems secure. By 2021, a worldwide price war is expected to force Netflix to cut subscription fees from $16 to $9 a month. Laura Martin warned in a memo on Oct. 3 that the company risked losing 5 million to 10 million US subscribers and 60 million international subscribers in 2020 if it did not act soon.
Netflix shares have risen 2.3% so far this year, while the Nasdaq Composite Index (COMP) is up 20% and the S&P 500 (SPX) rallies 18%.