Netflix is on track for a grim quarter, with shock waves already being felt at the company as new competition looms from Walt Disney and other companies.
“Shares of Netflix dropped nearly 4% on Tuesday and were on track for their deepest quarterly decline in seven years after two analysts added to growing worries about an impending wave of competition,” Reuters reports, adding: Netflix has lost 30% since the end of June, and if that decline holds until Monday, it will have been the worst quarterly performance for the video streaming heavyweight’s shares since 2012.”
The report cites upcoming streaming services from Disney and Apple, noting that the looming competition has “added to worries about Netflix’s slowing subscriber growth and rising costs as it increases spending to create top-tier series like ‘Stranger Things’ and ‘The Crown.'”
Disney’s new Disney+ service, which is set to launch Nov. 12, is seen as the most dangerous threat to Netflix. The report notes that Disney shares are up 14% since April 11, when the company unveiled its new service.
Also expected to add to Netflix’s concerns is Apple’s Apple TV+ service, which debuts Nov. 1. Netflix already faces competition from Amazon Prime, Hulu and others.
“Pointing to growing competition and higher costs, Pivotal Research on Tuesday slashed its price target for Netflix’s stock to $350 from $515,” Reuters reports.
In a client note, Pivotal analyst Jeffrey Wlodarczak is quoted writing: “Our new forecasts imply they are going to respond to content cost acceleration by revving up their own content spend that will allow them to maintain their subscriber growth while pushing back profitability materially.”