Netflix, a Wall Street favorite, is facing some uncertainty for the future with the loss of its most popular show, “The Office,” and impending changes to the streaming landscape, according to a report by CNBC.
“The Office” will be removed from the platform by 2021, despite Netflix offering NBC $90 million to keep it. Comcast will soon launch its own streaming service, as will Disney.
“While (Netflix) retains rights through January 2021, it is nevertheless a blow to lose one of its most-watched shows,” said Baird Analyst William Power.
Over the past year, stock in the streaming platform has traded down 5 percent. It dipped in Q4 of 2018 and rebounded 41 percent, and hasn’t done much since then. Many analysts have either hold or buy ratings on it.
The stock has historically done well, jumping in value by 475 percent in the past half-decade.
The pause in movement is largely blamed on uncertainty of what will happen next in the sector. While Netflix was one of the first streaming platforms, some experts say that its head start may soon be irrelevant.
According to Stifel Analyst Scott Devitt, “The battle is really in international (markets)” and “the U.S. is maturing and getting more competitive.” He added that it’s hard to predict how new streaming services will perform.
“Can these other services, that are potential competitors for Netflix, make the economics work where they get paid for their own content? Five years ago, that wasn’t the case,” Devitt noted. “It’s a relevant topic – it’s not to be swept under the rug – but it’s hard to know whether it’s that much of a problem for Netflix.”
Nomura Instinet Analyst Mark Kelley said that losing “The Office” doesn’t necessarily mean the stock has topped out, but could mean it will plateau. Competitors, he noted, could do one of three things to Netflix: “take away engagement, make content more expensive or diminish the price power Netflix has exhibited for several years.”
“The fact that the stock is basically sideways for the last six months tells me there is no clear view on any of those factors,” he said.