The streaming service is more affected by its competitors than it thinks. Two most prominent competitors in the market being Amazon and Apple Inc.
Netflix Inc. was the best performing company on the S&P 500 Index last year as it managed to outperform the index by almost 76% however in terms of year-to-date (YTD) performance; the stock of the steaming media giant is down by as much as 10.6%. It has been observed that big announcements by the streaming media’s competitors usually have a significant effect on Netflix stock.
However, it should be noted that to make a substantial effect on the stock of the streaming media company, its competitor should be prominent in the market. There is a long list of Netflix’s competitors both in the domestic as well as the international markets but the streaming media leader has managed to stay on top of its game up till now. The question now is how long will it managed to keep the throne?
The first competitor that has a significant effect on the video streaming media is Amazon.com’s Amazon Prime Service. It is one of the biggest threats in the market for Netflix. As both the companies are more or less providing similar content, it has become quite hard for the customers to set their minds on one service. Presently, Netflix’s market share in the market is up to 36% while Amazon Prime’s share is at 13%, as per the latest data collected by Nielsen.
Since Amazon is one of Netflix’s biggest rivals in the market, any news that the e-commerce giant shares, it is likely to have a significant impact on the stock of the video service provider. Almost every time news is announced by Amazon, Netflix stock sees a fluctuation of almost 5%. Back in September 2011, the retailer launched its Fire Tablet in an effort to compete with the streaming service due to which the stock of Netflix slumped by as much as 10%.
Furthermore, this fluctuation in the stock has witnessed a number of times; previously in 2012 when Amazon acquired access Paramount Films, the stock of the streaming media organization dipped by as much as 5% and another time during the same year, the stock dipped when the retailer announced a multi-year license deal with Epix; this deal meant that the service will gain access to double the titles that were initially on Amazon Prime Instant Video.
Finally, the stock dipped again in December 2015, when the online shopping company launched its streaming partners program. With the help of this project, video providers were able to increase their reach to millions of Prime members. The stock of the video streaming media again fell by 5% when this news was announced by the retailer.
The second company that has a significant impact on Netflix’s stock is Apple Inc. Even though the technology giant does not provide service similar to that of Netflix however it there is even a slight correspondence with the video provider it affects the shares. It has also been reported that Apple is working on its on subscription television service however no such announcement has been made by the company itself yet, the reports emphasized on the fact that it might be working on a cable replacement service.
Netflix stock has significantly been affected every time this news has surfaced since it would be a potential threat for the company, and if Apple gets in the game, Netflix might not remain the largest streaming organization in the United States.
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