Netflix investors are anxiously awaiting the company’s third-quarter earnings report next week, and hoping for a return to domestic subscriber growth. But international could end up being the issue.
Netflix suffered a rare domestic subscriber loss in the second quarter, giving back approximately 130,000. But the company expects to add 7 million paid memberships (800,000 in the U.S. and 6.2 million internationally) in the third quarter, which could help the company’s stock recover from months of decline.
UBS analyst Eric Sheridan predicts that Netflix’s domestic subscriber additions will be right on or slightly better than the company’s estimate. But international subscriber growth – which has been the primary driver for years now – could experience a slight setback.
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UBS predicts Netflix will add about 5.57 million international subscribers, significantly fewer than the 6.2 million Netflix expects to add. The firm said its estimates reflect weakness in key mature markets like the U.K., Europe and Brazil, but partially are offset by solid growth in India.
In the U.S. and abroad, Netflix is facing potential competition from several incoming streaming services, including Disney+, Apple TV+, Peacock, HBO Max and Quibi. But Netflix may not be impacted too deeply by all those news services flooding into the market.
According to a new consumer survey from Piper Jaffray, most consumers will stick with Netflix even as new services appear. The firm surveyed about 1,500 subscribers and found that approximately 75% don’t plan to subscribe to Disney+ or Apple TV+, while the “vast majority” of people who do plan on getting one of those new services intend to keep Netflix.
“Most existing Netflix subscribers appear to be trending towards multiple streaming video subscriptions, especially as many continue to reduce their spend on traditional TV offerings,” Piper Jaffray analyst Michael Olson said.