It’s bad news for Apple Stock if Netflix fails

It's bad news for Apple Stock if Netflix fails

Apple stock (AAPL) – Get Apple Inc. Report was unable to dodge broad-based bearishness towards tech names. Shares of the Cupertino company also dipped on April 20, although by a much tamer 0.1%. Could Netflix’s earnings developments have a substantial negative impact on Apple’s future financial results and its stock price? The Apple Maven looks at this question from a couple of different angles. The bad news for Apple and all companies that run a video streaming service is that Netflix’s drop in subscriber count in Q1 is probably reflective, in part, of weakness across the industry.

Netflix’s stock has plummeted as demand for streaming services has slowed. Could this spell doom for Apple TV+ and, as a result, the Cupertino firm’s stock? Netflix (NFLX) is a stock that is traded on the New York Stock Exchange. Netflix, Inc. should be contacted. This Thursday, investors have been licking their wounds, according to reports. Following poor Q1 subscriber figures on earnings day, the streaming company’s stock plummeted by 40% at one point during the trading session, losing $60 billion in value.

Highlights

  • But the end of lockdowns does not tell the whole story. In fact, Netflix admitted that the post-COVID headwind narrative masked underlying issues that are now coming to light. For instance, Netflix seems to believe that its addressable market of households with broadband connectivity has been slow at adopting on-demand entertainment. The uptake of connected TVs and high data costs were a couple of the challenges listed.

  • The Los Gatos company listed several factors that have contributed to it losing 200,000 subscribers in Q1, the first “negative net addition” print in a decade. All of the key reasons offered could reasonably impact all streamers, not only Netflix. Of course, there is the COVID-19 and post-pandemic effects. Following several months of confinement at home, which helped to propel demand for video streaming services, consumers now seem ready to step out of the house and spend money in offline experiences.

Netflix stock tanked on Wednesday due to weaker demand for the streaming service. How much of a problem do you think this is for Apple TV+ and, ultimately, for AAPL shares (Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Apple Maven)

Also, competition has increased quite a bit in the past couple of years. Every major media company now seems to have at least one streaming service in the market. For example, Disney (DIS) – Get Walt Disney Company Report has Disney+, Hulu and ESPN+, while Paramount Global (PARA) offers Paramount+ and its more obscure service, Pluto TV, only to name a few newcomers. Lastly, Netflix mentioned broad geopolitical and macroeconomic issues to justify loss of subscribers. Talks of an upcoming recession have surfaced, in part triggered by white-hot inflation, rising interest rates and the conflict in Eastern Europe.