Netflix investors nervous as rivals beef up their content
INVESTORS are growing nervous over whether Netflix can maintain its heady rate of growth when it unveils its latest results tonight.
The online streaming giant’s shares have soared 115pc since the start of the year, helping it leapfrog Disney to become the most valuable media company in the world. However, the shares suffered a 4pc sell-off on Friday ahead of its second quarter figures amid concerns that it will not be able to continue expanding at recent rates as rival streaming services beef up their own content.
This is despite the company planning to spend $8bn (£6bn) on original programmes, such as The Crown, this year and last week being nominated for 112 Emmy Awards, more than any other television network.
“When it comes to the biggest risk right now, it’s all about the prospect of its competitors upping the ante on its content’s quality,” Mark Tepper, the chief executive of Strategic Wealth Partners, told CNBC this weekend.
“At this point, Netflix has been able to stay ahead of the pack with its content’s quality, but headwinds could arise if competitors like Hulu, Disney or Amazon Prime develop more original content.”
The subscriber figures are the numbers to watch, Mr Tepper said, noting that the company expects to add 1.2m subscribers in the US, and another 5m internationally in the quarter.
Netflix saw 7.41m users join the site in the first quarter of 2018, even though it raised prices during the period. Bryan Kraft, at Deutsche Bank, said he saw “limited upside and even some downside” to global net subscriber additions for the second quarter.
Analysts are expecting earnings to come in at about 81 cents a share on revenues of $3.9bn.