Netflix (NFLX) has faced a torrent of bad news this week. On Monday, Netflix stock fell 1.58% after Credit Suisse commented positively about Netflix rival Disney+, a Walt Disney (DIS) product. Disney+ launched on November 12, and Disney is treating it as its most important product in about 15 years.
Credit Suisse analysts see Disney+ exceeding their earlier subscriber estimates. They now expect Disney+ to close the year with over 20 million subscribers, CNBC reports. Previously, analysts predicted Disney+ would finish the year with 14.3 million subscribers. The selloff in Netflix stock following the positive Disney+ commentary seems to reflect investor fear that Disney+ might succeed at the expense of Netflix.
On Tuesday, Netflix stock recorded its biggest decline so far in December. The stock fell 3.10% after Netflix lost a bitter courtroom battle to Fox, and Needham downgraded the stock.
Netflix stopped from poaching Fox executives
On Tuesday, a California judge on Tuesday dealt Netflix a blow in its long-running dispute with Fox over talent. Netflix has been recruiting Hollywood experts to bolster its content strategy. Netflix’s pursuit of top-notch Hollywood talent led it to hire several Fox studio executives before their Fox employment contracts expired. Fox was angered by Netflix’s poaching and decided to sue. After three years of courtroom battles, Fox prevailed. Judge Marc Gross of Santa Monica Superior Court barred Netflix from poaching more Fox staff. Fox studio is now a Disney property.
Needham tells investors Netflix will lose millions of subscribers next year
On Tuesday, Needham downgraded Netflix stock from “hold” to an equivalent of “sell,” CNBC reported. According to Needham, Netflix will lose 4.0 million US subscribers next year as the streaming war intensifies. Netflix has struggled to grow its US subscriber base in recent quarters. Netflix lost about 130,000 US subscribers in the second quarter. In the third quarter, it proceeded to add fewer US subscribers than it had forecast.
Subscriber losses could undermine Netflix’s revenue growth, resulting in the company not generating enough cash to fund its projects. Already grappling with a cash shortage, Netflix has turned to borrowing to plug holes in its budget.
Netflix stock bounces back after a stream of negative reports
Despite the negative reports about Netflix, the stock bounced back on Wednesday, posting a 1.98% gain. Still, Netflix stock remains the weakest FAANG stock this year. Netflix stock has risen about 12% so far, placing it behind Apple and Facebook (FB) stocks, which have gained 72% and 54%, respectively, this year. Alphabet (GOOGL) and Amazon (AMZN) stocks have risen 29% and 16%, respectively, this year.