Why Netflix Is Quietly Being Sold Off By Many Investors

netflix losing money

Netflix is by far the most popular streaming service option in the United States right now. The service is dominating here in the States and has been working to expand its reach even farther globally in recent years. However, in 2016 some Netflix shareholders have started to quietly drop their stock in the streaming service as the world changes and other viable alternatives pop up on the horizon.

Recent looks at Netflix stock indicates that Netflix stock is actually down 15% in 2016. In recent months Netflix has slowed down growth in US subscribers, although its worldwide count is still growing. In addition, the company has borrowed a lot of money to continue to produce originals in the hopes that those originals will be enough to keep subscribers coming back for more. Still, neither of those reasons explain exactly why Netflix's stock has been slowing down in growth. Instead, Barron's says that Netflix's reputation is changing and its stock is changing with it.

When Netflix first got started, the video rental by mail and streaming company was the new cool cat on the block, fighting and clawing for a position alongside veteran brands like Blockbuster. Since the company began streaming in 2007, it has been the leader in new ideas in the streaming realm. Netflix was the first to prove that original TV content could be viable outside of network and cable mediums. It was the first to really prove its model in the United States, in fact, and there was something sexy about that. But now that other key players, including but not limited to Hulu, Amazon and even streaming services in other countries, have proven they can compete, Netflix is not looking as sharp in everyone's portfolio as it used to.

Originally, the outlet notes that Netflix shares were boosted by subscriber growth. However, in the US, the market is pretty saturated in terms of Netflix users and the streaming service has had trouble enticing new users to sign on. Thus, the company expanded globally and has found some success in countries worldwide. Still, there are problems with US content moving elsewhere. While the company can sign licensing deals for some local content, most of its originals are still geared toward an English-speaking audience. Its pricing also reflects people with the expendable income to pay around $10 or more per month for the service. Both the content the company has been providing and the cost have proven to be problems for Netflix in certain countries.

Netflix has addressed this by starting to create some originals that are geared toward international audiences. Shows like Narcos and Marseilles have started bridging the gap, and Netflix has a German series called Dark in the works. It may not be enough. Reports indicate that Netflix's stock could drop by as much as 40% in the future. While that's an estimate, if the streaming service doesn't change it's narrative, it could find itself with even more competition as time wears on.

Jessica Rawden
Managing Editor

Reality TV fan with a pinch of Disney fairy dust thrown in. Theme park junkie. If you’ve created a rom-com I’ve probably watched it.