Netflix (NASDAQ:NFLX) has been one of the biggest success stories of this decade. What started as a DVD delivery service evolved into a video-on-demand provider that would shake the entertainment world. Netflix has struck fear into the hearts of the old media with its disruptive business model. However, the rise of competitors in the streaming space poses a near- and long-term threat.
Shares of Netflix have dropped 10% over the past three months as of close on July 29. The stock plunged after the release of its second-quarter 2019 results earlier this month. Netflix reported global net additions of 2.7 million users, which was way below its guidance of five million. The company lost more than 100,000 subscribers in the United States when it had projected that it would gain 300,000.
These are all scary indicators as the shadow of streaming competitors loom larger. Disney (NYSE: DIS) is set to launch its streaming service, Disney Plus, on November 12, 2019. Its mammoth content library includes content from Marvel, Pixar, Lucasfilm, 20th Century Fox (NYSE:FOX), and of course Disney’s original material. AT&T (NYSE:T) will launch a streaming bundle that will include shows from HBO, which is generally considered Netflix’s largest competitor in the prestige television space.
Even after this recent drop, Netflix is still trading at the high end of its 52-week range. The stock fell into technically oversold territory following its earnings drop but has recovered into this week. Netflix is showing weakness before its stiffest competitors have launched their platforms.
I’m staying away from the stock this year.
