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Netflix Misses on Sales in Q4 Earnings

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Netflix released its fourth-quarter earnings this past week. And while the company did continue to see sales rise, it still fell short of expectations. Netflix also announced it would be raising its U.S. prices yet again, the biggest the company has made thus far. Last year, the company also raised its rates in Canada as well.

Netflix is getting a bit expensive for a service that’s about to lose a lot of content in 2019 as Disney is set to launch its own streaming service later this year. So unless subscribers really love Netflix’s own content, it’s going to be even harder to justify keeping a subscription for the streaming service.

This also means it’s going to be harder to grow subscribers. While sales might get a boost from higher prices, enticing new subscribers to sign up for the service will be a whole other challenge. The economy is still doing well but once things slow down we could see many consumers looking to shed some costs, and Netflix could be an easy target.

Stock movement indicates some hesitation

Although the stock was initially up on the earnings result, it did taper off towards the end of the week. Netflix’s stock has stumbled over the past several months as it looks like it has finally run out of steam. Investors don’t appear as confident in the stock as some headwinds appear to be headed its way.

Why I’d avoid the stock

Netflix is not a stock I’d ever consider buying. For all the hype surrounding it, there are just too many red flags. The company is overly aggressive in its expansion as it continues to burn through cash in the name of growth. As appealing as it may be to grow internationally, there’s going to be enough competition in the domestic market that will keep it more than busy, and that’s where it’s going to need a lot of cash.

It’s best days are likely behind it, and rising competition along with increased prices are going to send many subscribers away from the service.