Netflix Shares are consolidating in the middle of a 2-year price range, as the competition for content production accelerates into a higher gear. In November, both Disney and Apple introduced streaming services that are expected to garner attention. Both are priced lower than Netflix but the content that is available pales in comparison to what Netflix currently offers. Recent earnings from the content giant continues to show that the company is benefiting from a change in the way consumers view content.
Content Consumers are On Their Phones
In the US consumer spend an average of 3 hours and 43 minutes each day on their smartphones and tablets an increase of 8-minutes year over year according to a report from the LA Times. Approximately 28% of adults say they use a digital device, like a phone or tablet, while watching TV. Many are watching shows or videos where there is the potential for live interaction. Netflix has taken advantage of this phenomenon with thousands of shows and movies.
Earnings were Robust
Shares have been mixed since Netflix released its Q3 results, which were mixed with The company an earnings beat and a miss on domestic subscriber ads. Earnings per shares came in at $1.47 per share compared to $1.04 estimate, but revenue missed slightly coming in at $5.24 billion compared to expectations of $5.25 billion. The miss came as domestic paid subscriber additions, dropped to 517,000 versus expectations it would increase to 802,000. International paid subscriber additions beat estimates coming in at 6.26 million versus expectations of 6.05 million.
Guidance from Netflix eased. For the fourth quarter, Netflix expects to report earnings of $0.51 per share on revenue of $5.4 billion. The company is projecting 7.6 million global net adds for the Q4, compared to 8.8 million year over year. Increasing competition and its new slate of programing were some of the reasons Netflix brought down its guidance.
Netflix Continues to Win Awards
Although the more famous awards will not be announced until 2020 the IFP Gotham Awards are always one of the very first shows of awards season. In many instances the taste of the New York-based Gotham’s and the Oscars matches up exactly. Netflix took more than half of the prizes at this year’s Gotham Awards.
Netflix stock trading has experienced a broad range of prices over the past two year and is currently hovering in the middle of its 2-year range. The short-term trend is up as prices returned to 2018 levels in September after hitting a 2019 near 385 in July 2019. Prices are experiencing a retracement of the recent uptrend with initial support seen near an upward sloping trend line that come in near 292. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal in oversold territory. The current reading is 81, above the oversold trigger level which could foreshadow a correction in the price of Netflix in the short term.