Netflix shares have been underperforming recently, causing some investors to worry that the streaming service isn’t as profitable as it once was. The company started 2019 off strong but its shares have been underperforming since mid-January.
And Netflix will soon be faced with increased competition in the market. Both Apple and Disney are preparing to launch their own streaming services in 2019.
But JP Morgan analyst Doug Anmuth says that rather than causing concern, Netflix’s recent underperformance presents a rare buying opportunity for investors.
Competition from Apple and Disney
Apple recently announced that the Apple TV Plus streaming service will launch this fall. And Disney will launch its own streaming service sometime in 2019.
This news caused many Netflix investors to worry that subscribers would begin to abandon the platform. Both companies pose a challenge to Netflix for the following reasons:
Apple looks to expands its customer base
With 1.4 billion active devices on the market, Apple has a built-in base of customers. Yahoo Finance pointed out that if just 10 percent of these customers sign up for Apple TV, that’s over 100 million subscribers right there.
And in a rare move for Apple, the company’s streaming service will be available on Samsung smart TVs, LG, Roku, Sony, and more. This is likely to help the company expand its user base.
Disney ends its contract with Netflix
Disney is expected to onboard 160 million paid subscribers when they launch their service. Disney already has an extensive movie library and they plan to create a variety of original content.
And Disney’s movies will no longer be available on Netflix, whose contract is reportedly set to expire at the end of the year. So Netflix has until the end of 2019 to replace that content.
Immediately following Apple’s announcement in March, Netflix shares dropped 2.6 percent. Disney is expected to provide further details about Disney Plus during its Investor Day on April 11.
In spite of the challenges posed by Apple and Disney, Anmuth says Netflix is still one of his top picks in 2019. Netflix could lose some subscribers to Apple and Disney but Anmuth thinks the impact will be minimal.
Netflix ended 2018 with over 139 million global subscribers and they spent over $12 billion creating original content in 2018. And Anmuth believes Netflix is still on track to bring in more than 200 million subscribers in 2021.