When Netflix (NFLX) reported a subscriber loss of almost one million, investors bid shares higher. The
company previously expected to lose 2 million subscribers. The markets liked the improved lower
subscriber count. Still, Netflix has many challenges ahead.
Netflix’s ~ 17% weekly rise last week is long overdue. The stock lost more than half its value since its
first-quarter earnings report. The rally lifted content streaming providers. This includes Paramount
Global (PARA), Warner Bros. Discovery (WBD), and platform firm Roku (ROKU).
Netflix Forecast
For Q3, Netflix expects revenue of $7.838 billion, up by 4.7% Y/Y. It will post an operating income of
$1.25 billion and an operating margin of 16%. The firm’s global streaming paid membership will rise by
3.8% Y/Y to 221.67 million. Those figures are that of a mature, streaming firm. The stock trades like a
value stock for a reason. Markets do not expect the pioneer of online streaming services to increase
market share.
Netflix has tremendous competition ahead. Apple (AAPL) is offering streaming services at a fraction of
Netflix’s subscription rate. Disney (DIS) does not charge much, either.
Netflix will need long-tail revenue drivers from good content. Stranger Things and Squid Game, a South
Korean drama, are two such examples.
Consider holding NFLX stock.
