Netflix shares were falling 0.68% to $322.93 on Friday. On Thursday, the stock fell 10.2% after the streaming giant posted its disappointing second-quarter earnings Wednesday afternoon.
Netflix beat earnings estimates, but it reported a net addition of just 2.7 million of total subscribers, missing expectations of 5 million. International subs increased by 2.83 million, coming in below estimates of 4.954 million. U.S. subs fell by 0.13 million, missing estimates of an add of 372,000.
Analysts lowered their estimates and price targets on Thursday to reflect "incrementally less bullishness," as RBC Capital Markets analyst Mark Mahaney put it. Overall, though, Wall Street is still largely bullish, as many see the second half of 2019 as a time period that could bring a strong content slate that could drive strong subscriber additions. Also, several analysts noted that Netflix has tended to miss quarterly subscriber expectations about once a year.
Still, the magnitude of the subscriber miss was large, and the miss comes just after Netflix raised prices across the board. Meanwhile, Disney (DIS) - Get Walt Disney Company Report and Apple (AAPL) - Get Apple Inc. (AAPL) Report are both very much in the early stages of creating their own streaming services, with Disney Plus set to launch in November of this year.
Netflix CEO Reed Hastings fielded a question about the threat of increased competition during its earnings "interview" with Guggenheim analyst Michael Morris by saying "it'snotazero-sumcompetition.Ithinkeverybodygetsthat.Peoplewillsubscribetomultiple [services]."
Netflix's earnings press release noted that "we don't believe competition was a factor since there wasn't a material change in the competitive landscape during Q2," begging the question of how much subscriber churn the company will see when Disney and Apple's new offerings are launched.
Despite this week's decline, Netflix shares are still keeping pace with the broader U.S. market, with both Netflix and the S&P 500 gaining roughly 20% year-to-date.