Sep 23, 2019

A whole new world for Netflix

Photo: Getty Images

Since announcing it had shelled out half a billion dollars for rights to stream "Seinfeld" starting in 2021, Netflix's stock has been careening downward, highlighted by Friday's 5.5% drop.

What's happening: The stock has been challenged for much of the year, but suffered mightily after what initially looked like a reprieve in July until it released disappointing Q2 earnings showing it lost more than 100,000 subscribers in the U.S. (It was expected to gain over 300,000.)

  • Since touching $380.55 a share on July 1, a shade below its 2019 high, Netflix's stock has lost nearly a third of its value.
  • After Friday's selloff, shares had fallen to $270.75, nearly 10% below where they were on Sept. 17, the day after announcing the "Seinfeld" deal.

The big picture: Investors soured on the company as the streaming wars heated up in recent months with other companies preparing to unveil new, lower-cost streaming options.

  • Netflix CEO Reed Hastings warned that production costs, which have already been significant, are going to climb even higher with the increased competition.
  • He pointed to the likes of Disney+ and AppleTV+, which will be available for $6.99 and $4.99 a month respectively, undercutting Netflix's $8.99 price point.

What they're saying: "While we've been competing with many people in the last decade, it's a whole new world starting in November," Hastings said in a Friday interview with Variety.

  • "It'll be tough competition. Direct-to-consumer [customers] will have a lot of choice."

Short sellers have been swarming. Data from S3 Partners shows Netflix has become the 4th most shorted stock in the U.S., with a little over $6 billion of short interest and 20 million shares shorted.

Yes, but: Investors are far from abandoning the stock. Netflix remains one of the most held stocks in the world, and was fourth among top holdings of hedge funds, according to recent data from Goldman Sachs.

  • Increased competition may not be that harmful to Netflix. In an August survey from data analysis company Civic Science, only 2% of respondents said they would ditch their Netflix subscription for Disney+, Hulu or ESPN+, while 33% said they would keep Netflix and not subscribe to the others.

Go deeper: New streamers battle over old shows

Go deeper

New streamers battle over old shows

Photo by George Lange/NBC/NBCU Photo Bank via Getty Images

Streaming services are putting up billions of dollars to win the rights to TV classics like "Friends" and "Seinfeld," both of which debuted over 2 decades ago on broadcast.

Why it matters: Many of these classic shows had previously been made available on other streaming services, but they're now being scooped up — and often for a lot more cash — by rivals that think they're necessary to compete for users.

Go deeperArrowSep 23, 2019

Streamers go to war over marketing

Illustration: Rebecca Zisser/Axios

The battle among streaming companies is getting competitive, as rivals block competitors from marketing on their TV channels or distributing content on their apps.

Why it matters: TV networks, hardware companies and telecom giants control access to some of the biggest audiences for new products, but they want to use that reach to benefit their own streaming offerings and stymie the competition.

Go deeperArrowOct 7, 2019

Netflix's international growth trouble

Data: Investing.com; Chart: Axios Visuals

Netflix could face trouble if its international growth hits a wall, analysts from Evercore ISI said in a note Friday.

Where it stands: International downloads of the Netflix app have been slowing since July. The app’s international downloads in the Apple App Store and Google Play Store this month have grown about 5% from the same period last year, compared to 21% growth in July and August.

Go deeperArrowSep 23, 2019