The streaming leader, Netflix (NFLX) seems to have taken a hit where the subscriber additions are considered. This would be the second time over the last nine quarters that the company has failed to miss on the additions of subscribers by a massive figure of 2.3 million.
Netflix reported for its previous quarter an increase in its revenue by 26% along with an EPS of $0.60. Yet the US subscribers saw a decline by 130,000. Combined with the company’s low profitability and negative cash flows, the stocks of the company may seem to be overvalued. But considering the spending that is being done across the tech sector, this decline may appear a more short term issue. This being said, other technology stocks have been increasing corporate footprints of their own.
Tech Stocks That Could Benefit From The Boom In New Streaming Stocks
The “Netflix and Chill” mentality of the new generation of viewers may have created an opportunity for certain niche sectors. One of these niche’s is on-demand delivery stocks. Amazon and Uber have entered the space with a significant focus on timeliness. However, as Uber puts it, UberEats may be the loss leader for the company due to the infrastructure. Furthermore, Amazon may be more insulated due to the sheer size of its core business.
This being said, it’s vital to look at companies that may be smaller, more nimble, and streamlined for potential profitability. In this regard, ParcelPal (PTNYF) (PKG) has been a company that we’ve discussed numerous times in the past. The company targets on-demand delivery of pretty much anything. But what has set it apart from the UberEats and Postmates of the world is their direct integration of cannabis.
Something that is beginning to set ParcelPal (PTNYF) (PKG) apart from its immediate competition is its diversification strategy. Not only is the company working with the likes of Amazon, but it is also entering into key verticals that are seeing an increase in rapid demand. Right now, ParcelPal (PTNYF) (PKG) has built relationships with businesses in both alcohol and cannabis.
We don’t have to go into the deep details of these booming industries, but it is vital to understand that the evolution from brick-and-mortar to on-demand delivery could be setting the stage for a major economic boom.
While consumers are becoming more comfortable with using smartphones and computers to buy groceries, they are also increasingly using the same technology to help them skip trips to the liquor store, according to data from the e-commerce analytics firm, Slice Intelligence. Netflix and Chill just got an upgrade!
What Does The Future Of Netflix Hold?
Market saturation has become quite a concern for investors. With the current 60.1 million subscribers as compared to the year-ago quarter figure of 55.7 million, it sure is an improvement. However, as per the targets of 60 million to 90 million, as claimed by the company’s CEO Reed Hastings, Netflix barely managed to reach the lower range.
In May, the company implemented a price rise by 18% from US$10.99 to US$12.99 and did not lose much of its customers which is an impressive feat. What also needs to keep in mind is that the previous quarter was relatively light. This is even with blockbuster shows like Stranger Things dropping towards the end of the quarter.
Bigger Costs Could Be Coming; Lower Netflix Stock Price To Follow?
The company also has huge marketing costs it plans to undertake in the later part of 2019. If history serves right then it could bring in enormous subscribers. Previous quarter had seen only a slight increase than a year ago in the marketing expenditure. As compared to quarter including March, the marketing spends actually went down by $13 million.
Among other worries, content leaving the platform and the rising competition has left the investors anxious. Netflix is losing its most-watched show “The Office” to Comcast. In addition, its second most-watched “Friends” is lost to AT&T. This is happening all while Disney will be taking back its movies – all of which would happen after next year. However, Disney, AT&T, and Comcast are yet to announce their own upcoming streaming services.
It may make it unlikely that consumers are shifting to these platforms. The miss on subscriber additions could be credited to the steep 18% price increase by the company. The light content and marketing also played its part in subscriber additions. The future does not actually seem bleak for the company.
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