Market Overview

Netflix Could Be Turning Into A Victim Of Its Own Success

Netflix Could Be Turning Into A Victim Of Its Own Success

Social data on Netflix, Inc. (NASDAQ: NFLX) has been deteriorating for some time.  It almost had to happen….it's hard to find another company that has had such incredible levels of consumer enthusiasm over the past 5 years.  We're starting to see some signs of decay though, and would be remiss if we didn't pass it on.  Again.

It's mostly the sentiment that worries us… Netflix should be in the 90+% positive range, as it has been historically.  Until this year.  Unfortunately, people just aren't as enamored with the service as they were in prior years.

As you can see from the LikeFolio app, Netflix consumers have generally been about 86-88% positive on the stock.  That's a good number for most companies, but Netflix is different.  It built its entire growth trajectory on unbelievable enthusiasm and word of mouth marketing.

Today, on-demand is nothing new.  In fact, the conversation seems to be more about which on-demand entertainment service to go with..

Netflix has built an absolutely incredible company, owned a niche, dominated that niche, and grown that niche to the point that it's now becoming a victim of its own success.

Now, Amazon Prime, Hulu and others are competing for the streaming on-demand dollar.  The concept of streaming on-demand isn't new anymore, so there is less to be excited about.  Now it's about which company has the best shows, movies and pricing.

That's what happens when great, innovative companies mature.  They get competition and their customers lose enthusiasm.  And it's usually followed by a slowdown in growth and multiple contraction that hurts the stock.

We love Netflix.  The product is amazing and a great bargain.  We just can't say the same for the stock at $101/share.

– LikeFolio provides research on companies based on purchase intent and sentiment data gathered from consumers on social media. 

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Andy Swan LikeFolioShort Ideas Crowdsourcing Trading Ideas General Best of Benzinga


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