CFDs sind komplexe Instrumente und umfassen aufgrund der Hebelfinanzierung ein hohes Risiko, schnell Geld zu verlieren. 73,9 % der Konten von Privatanlegern verzeichnen beim Trading von CFDs bei diesem Anbieter Verluste. Sie sollten überdenken, ob Sie die Funktionsweise von CFDs verstehen und ob Sie sich das hohe Risiko leisten können, Ihr Geld zu verlieren.
Wochenausblick: Tesla und Netflix Gewinne werden Tech ankurbeln
Earnings Season an der Wall Street nimmt diese Woche fahrt auf. Tesla steht kurz vor der Veröffentlichung seines Q3-Geschäftsbericht, nachdem sie das Quartal eine Rekordmenge Fahrzeuge ausgeliefert haben. In der Zwischenzeit wird der Covid-Sieger Netflix den Markt mit seinen Quartalszahlen und Abonnenten-Zuwachs auf den neuesten Stand bringen. Anderswo gibt es weniger Zahlen, der Fokus lieft hier am Freitag auf den Flash-PMIs.
Tesla-Aktien haben dieses Jahr um 450% zugelegt, da das Unternehmen Verkaufszahlen und Gewinne steigern und Sorgen zu seiner Bilanz zerstreuen konnte. Das Unternehmen veröffentlicht die Zahlen zum dritten Quartal am Mittwoch. Anleger erwarten starke Gewinne im Zuge der Rekord-Auslieferungszahlen in diesem Quartal. Tesla lieferte im dritten Quartal 139.300 Fahrzeuge aus und fertige 145.036. Das ist ein deutlicher Anstieg von den 90.000 Auslieferungen im zweiten Quartal.
Baird-Analyst Ben Kallo hob vor kurzem sein Preisziel für TSLA um 25% an. In einer Notiz, in der er die neutrale Bewertung der Aktie seit Januar wiederholte, hob der Analyst das Preisziel auf 450 USD von 360 USD. Er glaubt, dass sich das Unternehmen nach der Rally der Aktie wieder auf Wachstumsinvestitionen in konzentrieren kann.
„Wir haben ein erhöhtes Interesse an TSLA erlebt, vor allem die Entschlüsselung der Bull-/Bear-Stimmung ab hier“, schrieb Kallo. „Interessanterweise haben wir festgestellt, dass sich Anleger zunehmend auf langfristige Szenarien konzentrieren, im krassen Gegensatz zu vor wenigen Monaten, als der Hauptfokus auf dem kommenden Quartal lag.“ Analysten bleiben geteilter Meinung zu Tesla: 7 empfehlen den Kauf, 10 den Verkauf und 13 raten zum Halten.
Ein großer Fokus des Markts wird die Anzahl der von Netflix im dritten Quartal neu gewonnenen Abonnenten sein. Lockdowns auf der ganzen Welt brachten in der ersten Hälfte 2020s einen starken Aufschwung, mit einem Anstieg der zahlenden Neu-Abonnenten auf 26 Millionen im Vergleich zu 12 Millionen zur gleichen Zeit im Vorjahr. Das Unternehmen hat für das dritte Quartal 2,5 Millionen zahlende Nettoneuzugänge gegenüber 6,8 Millionen im Vorjahresquartal prognostiziert, da der Anstieg im ersten Halbjahr wahrscheinlich eine gewisse Nachfrage aus der zweiten Jahreshälfte gezogen hat. Das könnte sich allerdings als eine sehr konservative Schätzung herausstellen und Netflix diese Zahl noch schlagen.
Die Anleger werden sich mit dem erneuten füllen der Produktionspläne auch mit dem Cash Burn befassen. Die Investition in Inhalte ist kostenintensiv, aber auch ein wichtiger Hebel für Netflix bei der Überwindung von Konkurrenten in einem Umfeld mit zunehmend größerem Wettbewerb. „Durch die Investition in die Auswahl der Inhalte von Netflix konnte sich das Unternehmen von einer Plattform für Wiederholungen zu einer hochwertigen Quelle für Originalinhalte entwickeln und ist nun Vorführort einiger der größten Filmpremieren, was den Service zu einem essentiellen Bestandteil jeden Unterhaltungspakets für Verbraucher macht“, sagten Analysten von Cannacord Anfang dieses Jahres.
Goldman Sachs, die zuvor festgestellt hatten, dass die „massiven Investitionen in Inhalte, das globale Vertriebsökosystem und die Verbesserung der Wettbewerbsposition des Unternehmens die Finanzergebnisse weiter deutlich über die Konsenserwartungen hinaus treiben werden“, haben kürzlich das Kursziel für die Aktie unter Berufung auf besser-als-erwartete Q3-Ergebnisse von 600 USD auf 670 USD angehoben.
Vergessen Sie nicht unsere täglichen Earnings Season Specials auf XRay einzuschalten, um weitere Updates zu erhalten.
Globale Wirtschaftsdaten sind gerade eher selten. Der Fokus der Earnings Season an der Wall Street wird auf der Richtungsvorgabe für die Märkte liegen. Als nahezu einziges Land, das dieses Jahr mit Wachstum rechnen kann, werden am Montag erwarteten BIP-Zahlen, die Zahlen zur Industrieproduktion und für Investitionen in Sachanlagen Chinas dazu beitragen, den Märkten zu Beginn der Woche eine Richtung zu geben. Die britischen Einzelhandelsumsätze und Inflationszahlen werden nach Hinweisen darauf analysiert, ob die Bank of England die Zinssätze möglicherweise negativ bewertet, nachdem sie einen Brief an Banken gesendet hatte, in dem sie sie auf Zinssätze unterhalb der Null-Untergrenze vorbereitet hat. Freitag werden die PMIs für Flash-Fertigung und -Services für die USA, Großbritannien, die Euro-Zone, Japan und Australien veröffentlicht. Diese werden helfen zu zeigen, ob die Wiedereröffnungsdynamik so schnell wieder vergeht, wie es die Bären fürchten.
Zu guter Letzt müssen Anlege ein Auge auf den US-Wahlkampf behalten, da seit kurzem der Fokus auf einer möglichen Blauen-Welle und einem Sieg für die Demokraten liegt, der eine Flut an Konjunkturpaketen auf den Markt werfen könnte. Umfragewerte zeigen Joe Biden mit einem gesunden Vorsprung vor Donald Trump, allerdings ist sein Vorsprung in den Wahlentscheidenden umkämpften Bundesstaaten deutlich geringer. Außerdem sah es für Trump zu diesem Zeitpunkt vor vier Jahren tatsächlich schlechter aus als heute, wenn man die wichtigsten „Swing States“ betrachtet. Das Rennen um den Senat erlangt neue Wichtigkeit, da bei einem angenommen Sieg Bidens ein republikanisch kontrollierter Senat Reform-Vorhaben ernsthaft behindern könnte. Sie können mit der näher kommenden Wahl mit erhöhter Volatilität rechnen, aber wie unsere Freund von BlondeMoney letzte Woche bereits gesagt haben, könnte die Angst vor einer Nicht-Anerkennung der Ergebnisse übertrieben sein.
Top Wirtschafts-Daten der Woche
|Oct 19th||China GDP, fixed asset investment, industrial production|
|Oct 19th||BOC business outlook survey|
|Oct 20th||RBA meeting minutes|
|Oct 21st||UK CPI inflation|
|Oct 21st||Canada CPI, retail sales|
|Oct 21st||US crude oil inventories|
|Oct 21st||Fed Beige Book|
|Oct 22nd||German Gfk consumer climate|
|Oct 22nd||US weekly initial jobless claims|
|Oct 22nd||US CB leading index|
|Oct 22nd||Nat gas storage|
|Oct 22nd||New Zealand CPI inflation|
|Oct 23rd||Flash PMIs – AUS, EZ, Japan, UK, US|
|Oct 23rd||UK retail sales|
Top Geschäftsberichte diese Woche
Vergessen Sie nicht unsere täglichen Earnings Season Specials auf XRay einzuschalten, um weitere Updates zu erhalten.
|Oct 20th||Procter & Gamble|
|Oct 21st||NextEra Energy|
|Oct 20th||Lockheed Martin|
|Oct 23rd||American Express|
|Oct 20th||Snap (Snapchat)|
|Oct 22nd||Valero Energy|
|Oct 20th||Reckitt Benckiser|
|Oct 21st||William Hill|
|Oct 21st||Metro Bank|
*Slated for this date
Dutch PM Rutte ‘not optimistic’ ahead of EU summit, Netflix misses
European stocks were choppy and likely set for a volatile finish to the week as EU leaders gather in Brussels for a key summit, with market participants squarely focused on whether the EU can agree to a broad recovery fund as part of the talks over the bloc’s budget for 2021-27.
Whilst the EU seems to be edging closer to a deal and Merkel and Macron should ultimately get the consensus they need for something like a €500bn-€750bn package of support, there is a risk the market has put too much on this particular meeting and is left disappointed if there is no final decision taken this weekend.
We may get an agreement in principle on the fund that will be made up of a mix of grants and loans, with details on the total money value and attached reform requirements to be finessed. Even that might be a stretch though – Merkel warned this week that it could take until the end of the summer to achieve a deal and today said talks would be tough.
Dutch PM Rutte said this morning he’s ‘not optimistic’ ahead of the talks. Indeed, I would not expect much more than a political declaration affirming member states commitment to achieving some kind of a deal.
This not an ordinary summit – what’s being talked about is mutual debt issuance for the first time. A deal would be a major breakthrough for the EU and show that the bloc has the ability to respond to an era-defining crisis with one voice. Merkel is throwing all her political capital behind the European Recovery Fund, so there more than just EU solidarity riding on it.
The Frugal Four of Sweden, Austria, Denmark and the Netherlands remain the main barrier to achieving a deal as they are still to be convinced on why they should be sharing the burden of weaker states, but most countries will be out to fight their corner too. At least they are all back in a room and can talk through the night to trade horses and get something done – not so easy on Zoom, albeit it’s an absolute hangar of a room.
ECB’s Lagarde dismisses tapering chatter
Yesterday, the ECB left rates on hold as expected and Christine Lagarde appeared to push back against the tapering chatter by saying the ECB would use the full PEPP envelope of €1.35tn ‘barring surprises’. She also seemed confident member states would agree on the fiscal response to the crisis, which gave the euro a little nudge up at the time.
EURUSD is back under 1.14 this morning – a recovery fund deal would likely take it over 1.15 and set it up for further gains. Near term the support is around the 1.12 region.
Stocks on Wall Street finished lower on Thursday, led by a decline in tech. It’s probably too early to say this is part of a rotation out of growth into value – which could be a trade to consider if you assume that a vaccine is coming and things get back to normal – but there may be an element of profit-taking in big tech as investors take stock of events and consider the uncertainty over the pandemic, reopening rates, stimulus, earnings outlooks and stretched valuations in some corners of the market vs many stocks being in the bargain basement, among others.
Netflix subscribers and earnings growth miss
Netflix shares plunged 9% to $480 in after-hours trade as the company signalled weaker subscriber growth and profits missed expectations. Revenues were a tad better than forecast at $6.15bn, and as I expected, net subscriber additions in excess of 10m were ahead of estimates for about 7.5m, but earnings per share were a little soft at $1.59 vs $1.80 expected.
But guidance on future growth in subscribers was soft with the company only anticipating 2.5m net adds in September quarter. Maintaining Covid-era subscriber growth was always a tall order, if not impossible, but 2.5m would represent its weakest growth rate for a long time.
Although EPS was a miss, it was largely down to the timing of a California research and development tax credit charge. Netflix earnings have always been lumpy and net subscriber adds has always been a greater guide. The company expects 16% operating margin in 2020 and 19% for 2021, which CEO Reed Hastings said was ‘tamping down the expectations’.
Competition remains a headwind as new streaming services come online, but increasingly even social media is considered a rival. Netflix cited TikTok as a competitor – good news then that the US wants to ban the Chinese social media app.
There are of course questions about whether Netflix will manage to attract eyes in the way it did during lockdown – cinemas reopening, bars and restaurants luring people off the sofa etc, whilst the impact of Covid-related shutdowns on production is still being understood. Moreover coronavirus has simply pulled forward a lot of net adds from the coming quarters – expect slower growth but the company remains in a very good place.
US jobless claims mixed, homebuilder sentiment climbs
Economic data from the US was mixed. Initial jobless claims hit 1.3m, almost unchanged from the prior week. The improving trend has all but halted and may reflect the spike in coronavirus cases that has coincided with renewed lockdown measures in a number of economically important states such as Texas and Florida. California’s decision to roll back reopening signals worse could be ahead.
Continuing claims fell to 17.3m vs the 18m last week, which was a tad better than the 17.6m expected. The total number of people claiming benefits in all programmes for the week ending June 27th fell to 32m a decrease of 430k from the previous week. What’s clear is the rate of change is not moving in the right direction – getting back to pre-Covid levels will take a long time.
However, homebuilder sentiment rose 14 points to 72 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That’s where the index reached in March before the crisis hit and it slumped to 30 in April.
Oil and gold are both still in consolidation mode. WTI (August) cannot make a move beyond $41 stick, whilst gold is still crabbing sideways around the $1800 level and appears to set its new low and near-term support at $1796. US real rates (10yr TIPS) made new 7-year lows at –0.79%.
Stocks retreat before ECB, US + UK jobless numbers in focus
European stocks pulled back a little after a rally in the previous session as upward pressure on equities continues to hold firm despite rising case numbers as hopes for a vaccine are the new hopes for a US-China trade deal. Moderna has reported encouraging results from initial trials, while there is a lot of hope being pinned on AstraZeneca’s phase one trials, results of which are due to be published July 20th.
Whilst nothing is certain, it seems things are moving in the right direction for a vaccine to emerge by next year.
Shanghai fell 4% and Hong Kong was down almost 2% overnight after a mixed bag of Chinese economic data. US stocks rallied yesterday with the S&P 500 posting its highest close since the June peak, though futures point to the index opening around 20 points lower. The Dow is seen opening about 200 points lower.
UK jobless data reveals first wage drop in six years
The number of employees on payrolls in the UK fell by 650,000 between March and June, but the worst of the employment is still in front of us. Vacancies are at their lowest level since records began in 2001, earnings fell for the first time in six years, and the ONS noted that the standard definition of unemployment does not include half a million employees temporarily away from their jobs specifically for coronavirus-related reasons, who are receiving no pay while their job was on hold.
Unemployment claims were better than feared but we can pin this on furlough schemes which are extending the pretence, delaying the worst and providing a soft landing; but the jobless numbers clearly do not reflect the true extent of what’s coming. Meanwhile the number of hours worked – a key metric for the nation’s productivity – has collapsed.
China GDP rebounds, consumption lags
Chinese GDP grew 3.2% in Q2, up from the –6.8% contraction in Q1, which was better than forecast, albeit we apply the usual caveats about Chinese economic data. Industrial production rebounded 4.8%, but retail sales were down –1.8% vs an expected +0.3% improvement. Richemont flagged a strong recovery in China despite sales globally falling 47% in its first quarter, with luxury goods stocks weaker. Burberry shares fell another 3%.
US data was solid enough, with industrial production +5.4% in June whilst the Empire State manufacturing index hit 17.2, a beat on the 10 expected and a big jump from the –0.2 in the prior month. It remains to seen however to what extent the rate of change in the recovery turns lower as data starts to reflect the ‘second wave’ of cases and the imposing of some fresh lockdown restrictions in some key states.
In the Fed’s Beige Book, the Dallas Fed noted that while the outlook has improved, the upward trend in new COVID-19 cases has increased uncertainty. “Economic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic,” the national summary read.
US-China tensions are bubbling away – plans by the White House to impose travel restrictions on millions of Chinese Communist party members is the latest in the saga.
Goldman Sachs earnings crushed expectations with a stunning quarter of trading revenues. Bond trading revenue jump 150% to $4.24bn, while equities trading revenue climbed 46% to $2.94bn. For me all it did was underscore the divergence we are seeing between the real economy and the market, which is benefitting hugely from two-pronged monetary and fiscal stimulus.
Oil still rangebound after OPEC agrees to begin tapering production cuts
Oil couldn’t break free from its narrow range as OPEC+ extended cuts but began tapering with production curbs in August down from 9.7m barrels per day to 7.7m bpd, although the total effective cuts will be around 8.1m-8.3m barrels a day as countries which overproduced in May and June would make additional compensation cuts in August and September. OPEC will need to play this carefully – the longer its barrels are off the market the more it could encourage higher cost US oil to come back on.
Inventory data from the States was bullish with the –7.5m drawdown much higher than the –1.3m expected. Gasoline inventories also fell by more than expected at –3m. WTI (Aug) rallied from the medium-term trend support around $39.20 yesterday to press on the $41 handle but it continues to lack momentum – the CCI divergence on the daily timeframe chart points to the rally running out of legs and buyer exhaustion that could call for a further pullback.
In focus today: ECB, Netflix, US jobless claims and retail sales
Lots coming up today…
ECB meeting: Following the top-up to the PEPP programme in June to €1.35tn, the European Central Bank should be keeping its powder dry with the key EU summit starting tomorrow to hammer out the budget.
I expect Christine Lagarde to stress the importance of the fiscal side and leave policy unchanged but stress that ECB’s accommodative position – this is not the time for a discussion of tapering or the details of how much of the envelope you need to use.
In a recent interview she said the central bank had ‘done so much that we have quite a bit of time to assess [the incoming economic data] carefully’. The EU recovery fund is more important for EUR crosses right now – agreement this week may push EURUSD beyond the key 1.15 level.
Netflix earnings: The ultimate stay-at-home company, Netflix (NFLX) has made hay in the pandemic, with the stock hitting an all-time high and clearing $520. In the March quarter, Netflix added 15.77m new subscribers, which was more than double the original forecast of 7m net adds.
The company has forecast 7.5m new adds in the June quarter and may easily beat this with around 10m subscriber additions. Sequentially lower net adds should not weigh on the stock given the exceptional performance in the first quarter. ARPU could benefit from a depreciation in the dollar since it last reported.
As Netflix itself noted in its Q1 report, there is a lot of unknown to its forecasts. “Given the uncertainty on home confinement timing, this is mostly guesswork. The actual Q2 numbers could end up well below or well above that, depending on many factors including when people can go back to their social lives in various countries and how much people take a break from television after the lockdown.”
The market expects $6.1bn in sales and EPS of $1.8, with paid subscribers to hit 190m.
US weekly unemployment claims: Last Thursday’s data was better than expected for the week ending Jun 27th, however the total number of people claiming benefits in all programmes, including both regular state and all others, and including Covid-related programmes, rose 1.4m to 32.9m in the week to Jun 20th.
Initial claims today are seen falling again to 1250k from 1314k the previous week, with continuing claims seen down to 17500k from 18062k last week.
US retail sales: Expect to see continued improvement as the economy recovers off the lockdown lows. Retail sales should print another strong reading as consumers binge on their $600-a-week stimulus checks, which are due to finish this month.
Europe firms as Brent follows WTI’s lead lower
European markets are cautiously higher after yesterday’s decline, but the daily momentum indicators are fading. The reality of economic collapse is being seen in oil markets, but – juiced by central bank support and of course being much more forward-looking than, for instance the June oil contract – equity markets are displaying greater optimism. I’d say oil markets are telling us how bad things are right now, while equity markets tell us how good or bad investors hope/fear things will be next year.
Now it’s the turn for Brent. Turmoil in global oil markets dragged Brent futures under $16, leaving the front month trading at its weakest since 1999. The collapse in WTI at the start of the week has spooked the market and now we see similar concerns about floating storage starting to fill up as physical storage constraints worrying WTI. The roll this Friday could be gappy, although Brent is cash settled, not physically, so in theory it ought not to be as troubled and negative prices are unlikely. That said, if global storage is running out – and that is what the Brent trade is starting to suggest – then there will be no bid and prices could hit zero.
WTI remains under pressure with the June contract suffering a ‘flash crash’ yesterday as it slumped as low as $6.50 before recovering above $10. The June contract, whilst not immediately facing the same liquidity problems as the May contract did on Monday, is going to be under pressure all the way to expiry with nowhere left in the US to take physical delivery. It too could turn negative if paper traders are left holding the baby close to expiry. July is trading around $18.40, August is above $21. Edward Morse, head of commodities at Citigroup, says oil could bounce back to $50 by the end of the year.
Meanwhile the damage is being felt in oil ETFs which are needing to shift their holdings further out in future months. The United States Oil Fund (USO) is ditching its June holdings as it tries to shore its balance sheet, and this will be having an impact on the front month trading. It will also be sharpening the super contango. It becomes a vicious circle as long as no one wants to take delivery. Yesterday saw more than 2m June contracts traded, the CME Group said, the busiest single day for the month ever.
The pain in oil markets is unsettling risk appetite more broadly, with the S&P 500 down 3% and the Dow shedding over 600 points yesterday. It was the worst day for the three main indices since April 1st. Charts and momentum suggesting the rally has lost steam and 50-day SMAs (blue line) almost seem to be frightening the market and forcing it to back off. The question is whether sentiment sours from here and we retest the lows or it’s just a pause in the rally. Earnings are not telling us an awful lot as uncertainty reigns. The key is the emergence from lockdown and restart of economies. And of course, finding a vaccine.
Dow Cash, 1-Day Chart, Marketsx – 08.32 UTC+1, April 22nd, 2020
Whilst European markets are higher today after yesterday’s drop, the momentum is fading and the DAX has broken under trend support. Again the 50-day SMA is major barrier.
DAX Cash, 1-Day Chart, Marketsx – 08.35 UTC+1, April 22nd, 2020
A major boost for Netflix as it added almost 16m new subscribers in the first quarter, well ahead of expectations. The company has been boosted by lockdown measures and should see more net subscriber adds in Q2 but notes in the circumstances it’s all ‘guess work’. But this might be as good as it gets this year – Netflix won’t get a better opportunity to gain new members than now. I’d also be concerned that after such a big runup in the stock to all-time highs, the upside is pretty well discounted now and viewing figures will start to decline as lockdowns end. A stronger dollar is hitting foreign earnings and spending on content is delayed by production shutdowns. EPS was a slight miss but Netflix profits are always a little lumpy due to inconsistent spending on content.
In FX, GBPUSD broke down through near-term horizontal support and out of its range yesterday and with the bearish bias persisting the next level comes in around 1.2160, the Apr 6th and late March swing lows. Near-term though the 1hr MACD is positive after a potentially bullish crossover late yesterday.
GBP/USD, 1-Day Chart, Marketsx – 08.35 UTC+1, April 22nd, 2020
Week Ahead: Covid-19 earnings season, Amazon & Netflix to report
Amazon surged to a record high last week as markets bet that the company is well positioned to weather the coronavirus pandemic. Lockdown has forced even more consumers to switch to online shopping, and the surge in demand has seen Amazon go on a huge hiring spree, adding 100,000 new workers in March and announcing plans for another 75,000 hires. Cowen Analyst John Blackledge believes Amazon may have witnessed a surge in demand during March equivalent to its annual Prime Day members sale.
The tedium of lockdown is likely to have driven up subscription rates for its video and music streaming services and its Kindle library as well. Guidance will show how sticky Amazon expects these new customers to be once lockdown measures are lifted.
Remember, you can follow the biggest earnings season stories with our daily coverage on XRay.
Streaming service Netflix is expected to reveal a huge surge in subscriber numbers when it reports earnings this week. Expectations that Netflix will continue to see its popularity surge over the coming months drove the stock to a new record high last week. Even after lockdown is over, the consumer shift towards streaming services is likely to remain, as social distancing and fear over a resurgence in COVID-19 cases keeps people away from cinemas – and going outdoors in general.
UK and US jobless data
There are plenty of predictions for the impact of the coronavirus pandemic upon the world’s leading economies, but markets continue to be hounded by fears that these might not be pessimistic enough. More labour market data from the UK and US this week could heighten or assuage those concerns.
In the UK, thanks to the government’s pledge to pay the wages of furloughed workers, the unemployment rate isn’t expected to climb more than a percentage point during 2020. In the US, economists believe 20 million Americans will file new jobless claims during April. A sharper or softer rise than expected in either of these metrics will cause markets to reprice their expectations that these forecasts will be met or exceeded.
Will markets focus on shape of recovery as PMIs slump?
Business activity across the Eurozone and the UK plunged to record lows last month, and we know there’s more bad news to come. The Eurozone composite could drop as low as 20 during April, with the UK reading predicted to slump to 21. The real question is whether markets believe the recovery from this downturn will be a rapid one – confidence in a sharp pullback could soften any negative reaction to another round of gloomy PMIs, assuming markets are in an optimistic mood.
Netflix, Apple, Disney: Who will you back in the battle of the streamers?
Netflix was once the king of streaming, but its dominance could be coming to an end. Competition has already been fierce thanks to Amazon Instant Video and Hulu, but the streaming market is about to get a lot more crowded.
NFLX has now turned negative on a year-to-date basis, with the stock feeling the pressure thanks to an uncertain outlook for the company. Both Apple and Disney are launching their streaming services this year and Netflix is sure to suffer as a result – especially as both drastically undercut its pricing.
Apple TV+ launches on November 1st and reportedly has a budget of $6 billion in order to help it get some of Hollywood’s biggest stars involved. Already on the starting line-up are Reese Witherspoon, Jennifer Aniston, Jason Momoa and Oprah.
Apple is offering a first-year subscription completely free with the purchase of any new Apple device – a great way to leverage its existing market even if they do already have other subscriptions.
However, it remains unclear whether Apple TV+ will also have a library of licensed shows and films alongside its own original content. Without this its offering could seem rather sparse at launch. The service will launch with nine shows and Apple plans to add another five over the next few months.
This lack of choice could see consumers treating Apple TV+ more as a supplement to Netflix – are many really going to cancel their subscriptions for the sake of nine shows?
Is Disney a bigger threat to Netflix than Apple?
While Apple has the capital to throw behind new content, Disney represents a more established threat. Its streaming service, Disney+ is set to launch with an extensive back catalogue of beloved classics. And that’s not to mention mega-franchises like Star Wars and the Marvel Cinematic Universe, as well as content from National Geographic. This is a much bigger blow to Netflix.
Like Netflix and Apple, Disney will also be investing heavily in new shows. In the first year the service will premiere over 25 original series, as well as 10 films.
In this respect, Apple seems like something of an outlier. It’s tiny library of original shows may attract Apple enthusiasts, and the small price tag might see it sit alongside consumer’s existing subscriptions. Given that a lot of consumers will be getting the first year free anyway, it will be a while before we know whether those initial subscribers translate to paying subscribers in twelve months’ time.
Apple could be hoping to use its TV+ offering as a way of ensuring brand loyalty. Amazon already does this with its Instant Video Service. It’s only a few pounds or dollars more each year to opt for the full Prime subscription, which also includes free delivery and music streaming.
Even if it is built to sit alongside its competitors, it still creates problems for Netflix. The last time the company raised prices it lost subscribers – with more alternatives out there Netflix will have to think twice before it ups its costs again. Just how loyal are Netflix customers: if the company raises its prices will they drop rivals to free up disposable income or just jump from the most expensive ship?
Netflix tumbles on subscriber woes
The latest earnings report from Netflix rattled investors and sent the stock tumbling in afterhours trading and languishing during yesterday’s session.
Netflix was off 17% on Wednesday evening and, despite paring gains during trading yesterday, closed 11% lower.
According to the new numbers, Netflix lost 130,000 customers in the US during the second-quarter. It’s the first time the streaming service has reported dwindling subscriber numbers in eight years. Analysts had expected US subscriber numbers to grow 352,000 across the period.
Netflix is well established in the US, and overseas is where the true growth potential lies. But the numbers here are disappointing as well, with Netflix managing to add just under half (2.83 million) paid subscribers in international territories of the 4.8 million forecast by analysts.
Netflix stumbles as competitors line up
It’s a worrying sign of weakness at a time when competition in the video on demand space is heating up. Apple, Disney, AT&T and Comcast all have streaming services in the works. The launch of these will see popular content disappear from Netflix.
For instance, Disney’s streaming service will be the exclusive home of Marvel and Star Wars movie. The two most-streamed shows on Netflix – The Office and Friends – will soon been removed as they head to Comcast’s streaming platform and HBO Max, run by AT&T, respectively.
Netflix said in a letter to shareholders that it believed the second-quarter “content slate” was less appealing than it had anticipated, driving fewer signups. The company also noted that subscription rates had slowed slightly more in regions where prices have recently increased than in those where the cost has remained unchanged.
Can Netflix afford not to raise prices?
This could reveal that Netflix is in a tricky position. With so many competitors, Netflix may find itself unable to raise prices as users can easily switch to an alternative video on demand service. But in order to stay attractive Netflix needs to continue investing heavily in content – and this does not come cheap.
Netflix has enjoyed a long run as the King of streaming. But it’s an expensive crown to keep, and the coming few quarters will see many new challengers to the throne step forward.