Netflix, Inc. (NASDAQ:NFLX) stock was down 4.95% in early afternoon trading on July 17. Shares are now down over 7% over the past week after the release of its second-quarter results. This was the first time in more than a year that a quarterly report for Netflix had disappointed investors.
Netflix added 5.15 million subscribers in the second quarter which came in below the 6.2 million consensus estimate. The streaming giant did manage to post earnings per share of $0.85 which beat the analyst expectations of $0.79. Historically the second quarter has been bumpy for media stocks and this may be reflected in this report. Netflix is also facing growing competition, both from the new and old guard.
Amazon.com, Inc. (NASDAQ: AMZN), Facebook Inc. (NASDAQ: FB), and Apple Inc. (NASDAQ: AAPL) have pledged billions to produce original content on their own platforms. Tech giants are flush with cash and in a fantastic position to enter the fray as the demand for new content is growing.
The old guard is also responding in kind. AT&T Inc. (NYSE: T) recently acquired Time Warner and reports indicate that it will push HBO to produce more content in order to compete with the volumes that Netflix is posting. Netflix broke a 17-year streak for HBO as it surpassed it for more Emmy nominations. HBO’s flagship show Game of Thrones will wrap up in 2019, which will intensify the pressure to produce competitive content going forward.
Netflix stock is still up over 100% in 2018 even after this most recent dip. The company has established its powerhouse position in providing streaming content, and investors can justify buying into the current dip.
