After Wednesday's earnings reaction, the stock boasts a return of 17% in the year-to-date, compared to a 20% return for Disney, 48% return for Apple and 15% for Amazon (AMZN) but the stock's reaction will have to be solidified before the drought is deemed over for Netflix and that may be hard given the gritty details of the quarterly report. Owing to that, Netflix will be able to invest more in Indian original content such as Sacred Games and Bard of Blood, it added.
The latest sign of the challenges the company is facing emerged Wednesday with the release of its third-quarter results.
Netflix said that it will continue to expand its non-English language original offerings because they help the company increase penetration in global markets.
"In some ways Netflix has defied the naysayers in Q3, coming close enough to guidance and delivering impressive revenue and earnings growth", Macquarie analysts said.
Netflix thinks everyone will be competing with broadcast: According to Netflix, upcoming streaming services from Disney+ and Apple TV+ will simply mean that all streaming services will compete with broadcast.
When Netflix posts results after markets close Wednesday, analysts expect an increase of about 800 000 USA subscribers for the third quarter.
More competition looms on the horizon, as AT&T's WarnerMedia will launch its new Netflix rival "HBO Max" in early 2020 after reclaiming the rights from Netflix to stream its popular television comedy "Friends". We've been preparing for this new wave of competition for a long time.
"Since our US price increase earlier this year, retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower USA membership growth", the company said in an investor note on Wednesday.
Apple Inc (AAPL.O) also will debut a much smaller streaming video service with original programming in November.
Netflix did admit, however that it does anticipate some early forces working against it, citing "The launch of these new services" creating "modest headwind to our near-term growth, and we have tried to factor that into our guidance". "Retention has not yet fully returned on a sustained basis to pre-price-change levels, which has led to slower US membership growth", it said.
Netflix had debuted a low-priced mobile-only plan for the India market at Rs 199 per month in July, after almost three months of testing in the country. But the biggest news may have been the addition of 6.77 million new paying subscribers over the course of the quarter, which is a big bounce back from a disappointing second quarter. That topped Wall Street's concensus target of $1.04. The company generated $5.42 billion in revenue, translating to $1.47 earnings per share, compared to the expected $5.25 billion and $1.05 EPS. In the meantime, Netflix will continue to tap the high-yield market as needed, it said. Netflix reports financial results Wednesday, Oct. 16.