Bears Growl, Chase Down Netflix (NASDAQ:NFLX)
$AAPL, $AMZN
Netflix shares closed down again Friday at 98.79 their 6 straight day of declines with the stock down 16%+ since 27 August.
The Big Q: What has investors spooked?
Netflix has historically been a volatile stock buffeted by broad economic fears in recent weeks: It took a beating along with media and entertainment stocks in a sell-off in August.
But Netflix shares have suffered bigger losses than the overall market in the last 4 days, and the once high-flying stock may be crashing on fears that Apple (NASDAQ:AAPL), Hulu and Amazon.com (NASDAQ:AMZN) are putting new competitive pressure on the # 1 subscription-video provider.
The Big A: It was revealed this week that Apple is scoping out Hollywood to potentially launch its own original entertainment programming. If the tech giant were to aggressively jump into the space with originals, Netflix could be in for some serious pain. Remember, Apple has over $200-B in cash.
The bad news started last Sunday a week, when Netflix disclosed that its deal for thousands of movie titles from Epix would lapse at the end of September. At the same time, Hulu and Epix announced a streaming pact for the same content to pick up after Netflix’s rights end.
Then, Hulu announced an ad-free tier of its subscription service, for $12 monthly, finally offering one of the Key benefits that have long appealed to Netflix users. Tough Hulu’s pricing for the no-commercial service is higher than Netflix’s most popular plans.
Then last Tuesday, Amazon.com launched the ability for Prime customers to watch TV shows and movies on iOS and Android devices while disconnected from the Internet, a feature Netflix has indicated it will never offer. That came a few days after Amazon announced a September rollout date for Prime Instant Video in Japan, where Netflix launched on 2 September.
The news sequence seems to have had a cumulative effect, leading investors exit Netflix stock and take profits. The decline comes after shares had climbed to record highs in June.
Still, many analysts remain bullish on Netflix, we here at HeffX-LTN are Neutral NFLX.
| HeffX-LTN Analysis for NFLX: | Overall | Short | Intermediate | Long |
| Neutral (0.04) | Neutral (-0.07) | Neutral (0.06) | Neutral (0.14) |
The Netflix pullback may be partly due to greater threats from Apple, Hulu and Amazon, as well as possible concerns with China’s economy affects Netflix’s international expansion plans. But there are too many factors to read much into any one item at this point.
Have a terrific week.
HeffX-LTN
Paul Ebeling
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