Shares of Netflix rose on Wednesday after nine straight days of losses that shaved $24 billion from its lofty valuation on Wall Street.
Netflix stock had been in a funk even before the company reported last week that it lost U.S. streaming subscribers during the most recent quarter for the first time in its history. Netflix also said last week that it added just 2.7 million subscribers worldwide during the quarter, while analysts expected more than 5 million.
The streaming leader saw its stock rise 3.5 percent on Wednesday to $317.94, down 17 percent since May and down 23 percent in the past 12 months as investors worry about competition coming from Disney, WarnerMedia, Apple and others. A study from Streaming Observer and Mindnet Analytics in April suggested that 14.5 percent of Netflix subscribers will consider defecting to Disney+ when that $7-a-month service launches in November.
Netflix’s subscriber woes are also owed to a 13-18 percent price increase (depending on plan), and some observers speculate a small portion is due to politics, as conservatives took to the internet on a few occasions to announce they’d be canceling their subscriptions: once after Netflix signed a content deal with former President Barack Obama and his wife Michelle; another after it appointed former National Security Advisor Susan Rice to its board of directors; and again after it threatened to pull production from Georgia over a strict anti-abortion law.
While some Netflix bears think the stock is not yet through with its decline — Michael Pachter of Wedbush predicts it will fall to $188 in the next 12 months — Todd Juenger of Bernstein said Wednesday that shares ought to rise 46 percent to $450 in the next year or so.
“We continue to strongly believe that ‘competition’ is a red herring,” said Juenger in his Wednesday research note. “This is not a market-share game. For Disney+ (or any other service) to harm Netflix, one would have to believe a meaningful number of subs would conclude, ‘Now that I have Disney+ it doesn’t make sense to keep Netflix.’ We cannot imagine consumers behaving that way.”
Juenger, in fact, may be onto something, considering that the results of a poll made public Wednesday indicates that a lot of Netflix users already subscribe to multiple services, and that the sweet spot for consumers is three streamers that cost them a collective $21 monthly.
“We think additional new, quality SVOD services will do more to help Netflix by accelerating the migration to internet TV than it will harm,” said Juenger. “When households get internet TV, they usually get Netflix.”
