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Is Netflix Feeling the Heat from its Competitors?

While the rise of direct-to-consumer (DTC) services from traditional pay-TV operators like Comcast has given rise to the idea that more viewers could be cutting the cord on pay-TV and
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The post Is Netflix Feeling the Heat from its Competitors?

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While the rise of direct-to-consumer (DTC) services from traditional pay-TV operators like Comcast has given rise to the idea that more viewers could be cutting the cord on pay-TV and switching to over-the-top (OTT) services, data from Nielsen seems to suggest otherwise.

According to Nielsen data, streaming represents just 27% of television screen time in the U.S., while linear television represents 63%.

Using the TipRanks stock comparison tool, let us look at whether Netflix, the pure-play streaming service, is facing stiff competition from other DTC services launched by The Walt Disney Company (DIS), Comcast (CMCSA) and ViacomCBS (VIAC).

While this author is bullish on Netflix, she is neutral regarding the other stocks featured in this article.

Netflix (NFLX)

It seems that users are not warming up to Netflix as rapidly as they previously had. Earlier this month, Evercore ISI analyst Vijay Jayant noted that the Monthly Active Users (MAU) data for NFLX indicated a fall of 5% year-over-year for the month of July.

The analyst also said that the app downloads for the company declined 22% year-over-year in July, on a global basis. Jayant said in a research note to investors, “While NFLX has passed the toughest y-o-y COVID-19 comparable period, we think the focus will shift to how engagement and subscriber additions perform as the world re-opens over the coming months.”

“Additionally, as we have pointed out in the prior reports, NFLX’s domestic download market share vs. other SVOD services has been challenged following the rollout of HBO Max,” the analyst added.

In contrast, according to the analyst, Disney’s DTC service, Disney+ has seen the download of its app jump 124% year-over-year in July.

In Q3, NFLX expects global paid memberships of 212.68 million, a rise of 9% year-over-year.

Netflix ended the second quarter with 209 million paid memberships, with global net additions of 1.54 million paid members. The company said in its letter to shareholders, “COVID has created some lumpiness in our membership growth (higher growth in 2020, slower growth this year), which is working its way through.” (See Netflix stock chart on TipRanks)

However, Rosenblatt Securities analyst Mark Zgutowicz didn’t seem to be buying into the pandemic “lumpiness” theory. The analyst was of the opinion that a slew of subscription video on demand (SVOD) and advertising video-on-demand (AVOD) offerings “are weighing heavier on Netflix's sub acquisition woes vs. content and/or pandemic compares.”

The analyst noted that NFLX’s guidance of 3.5 million net additions in Q3 “does not suggest content will cure its sub acquisition woes.” Furthermore,  Zgutowicz is concerned about Netflix's competition. He noted that the array of streaming choices available “are simply enough to create pause Netflix sub starts and restarts. And while the majority of these offerings cost less than Netflix, management is prudently looking to offer more with gaming to sustain its annual pricing trajectory.”

The analyst is sidelined with a Hold rating and a price target of $450 (17.7% downside) on the stock.

Turning to the rest of the Street, consensus is that Netflix is a Moderate Buy, based on 20 Buys, 7 Holds, and 3 Sells. The average Netflix price target of $602.23 implies an approximately 10.1% upside potential from current levels.

The Walt Disney Company (DIS)

In Q3, Disney’s direct-to-consumer (DTC) services made up 25.3% of Disney’s total revenues of $17 billion, with revenues of $4.3 billion.

Disney’s CEO, Bob Chapek said, “…our direct-to-consumer business is performing very well, with a total of nearly 174 million subscriptions across Disney+, ESPN+ and Hulu at the end of the quarter, and a host of new content coming to the platforms.”

At the end of Q3, Disney+ had subscribers of 116 million, a more than 100% growth year-over-year, while Hulu subscribers stood at 42.8 million, up 21% year-over-year. However, average monthly revenue per paid subscriber at Disney fell 10% year-over-year to $4.16. (See Disney stock chart on TipRanks)

According to Wells Fargo analyst Steven Cahall, the jump in Disney+ subscribers most likely “came from Disney+hotstar, which is now nearly 40% of subs, expectations were nonetheless modest so the +12mm quarterly net adds proved yet again that Disney's growth has fewer impediments.”

Furthermore, the analyst noted, “Disney+ subs came in ahead of expectations (again) for a pretty strong beat in what was supposed to be a wash quarter (again). The momentum of DTC seems undaunted.”

Indeed, the company’s management noted on its earnings call that the DTC “business is the company's top priority.”

Positively impressed with Disney's performance, Cahall reiterated a Buy rating on Disney following the Q3 results, but raised the price target from $209 to $216 (23.3% upside) on the stock.

Turning to the rest of the Street, analysts are bullish on the stock, with 14 Buys and 3 Holds. The average Disney price target of $215.38 implies 23% upside potential from current levels.

Comcast (CMCSA)

In Q2, Comcast reported revenues of $28.55 billion, up 20.4% year-over-year. The company’s streaming service, Peacock, contributed $122 million in revenues to Comcast’s NBCUniversal’s Media segment, and this segment reported an adjusted EBITDA loss of $363 million related to Peacock.

As of July 29, the company stated on its earnings call that Peacock had “54 million sign-ups and over 20 million monthly active accounts.” (See Comcast stock chart on TipRanks)

According to Raymond James analyst Frank G. Louthan, the Tokyo Summer Olympics could alone bring in “~10M incremental "paying subs" onto Peacock, altogether amounting to ~$222M worth of Peacock-generated revenue during 3Q21… and we are raising our 3Q21 NBCU media estimate, accordingly.” That's because Peacock featured five new channels which were dedicated to the Olympics, which included live coverage and Olympic-related features.

Following the Q2 results, the analyst reiterated a Buy and a price target of $65 (9.4% upside) on the stock.

Last week, the company partnered with ViacomCBS (VIAC) for the launch of SkyShowtime, a new SVOD service, in over 20 territories in Europe. The companies will jointly control and equally invest in the partnership, which will be structured as a joint venture. Comcast's expansion into Europe could sharply improve its revenues.

Turning to the rest of the Street, consensus is that Comcast is a Moderate Buy, based on 12 Buys, 2 Holds, and 1 Sell. The average Comcast price target of $66.64 implies an approximately 12.2% upside potential from current levels.

ViacomCBS (VIAC)

Streaming has also fueled the rise in revenues for ViacomCBS in Q2. The company posted revenues of $6.56 billion, up 8% year-over-year, while global streaming revenue jumped 92% year-over-year to $983 million.

Furthermore, the company added 6.5 million streaming subscribers globally in Q2 to reach 42 million subscribers. VIAC’s streaming subscription revenues rose 82% year-over-year to $481 million in Q2. (See ViacomCBS stock chart on TipRanks)

Following the Q2 results, Goldman Sachs analyst Brett Feldman was pleasantly surprised to see that “VIAC is showing much more durable momentum with its flagship streaming service (Paramount+) than we had expected.”

The analyst pointed out that the company’s streaming service generated more net additions in Q2 “than its launch quarter in 1Q (6.0mn), it did this during a period when most other streaming services showed material deceleration.”

Analyst Feldman ascribed upside potential to the streaming subscriber and revenue estimates, on the basis of VIAC’s “upcoming market launches, robust slate of content and new distribution agreement with Sky.”

Reflecting his upbeat approach to the stock, the analyst reiterated a Buy and a price target of $75 (88.8% upside) on the stock.

Turning to the rest of the Street, consensus is that ViacomCBS is a Strong Buy, based on 6 Buys and 2 Holds. The average ViacomCBS price target of $62.75 implies an approximately 58% upside potential from current levels.

Bottom Line

On its earnings call, NFLX’s management acknowledged the competition it is facing from other OTT services, but said that it is concentrating on adding more value to its service. It is doing this by making a foray into gaming, as indicated by the recruitment of Mike Verdu as VP of game development last month.

The company has also established a foothold in the e-commerce space by launching its first owned-and-operated online retail outlet, Netflix.shop, to sell products directly to consumers.

While Netflix is facing the heat from its competitors, it also seems that the company is trying to add more value to its service through video gaming and its online retail outlet, and in that way extending its original programming franchises. With those strategic moves, Netflix stands a good chance of beating its competition.

Disclosure: Shrilekha Pethe held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The post Is Netflix Feeling the Heat from its Competitors? appeared first on TipRanks Financial Blog.

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Wake-Up Call

Wake-Up Call

Authored by James Howard Kunstler via Kunstler.com,

“Those who organized the disaster will take advantage of the inevitable…

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11 mins ago

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March 22, 2024

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Wake-Up Call

Authored by James Howard Kunstler via Kunstler.com,

“Those who organized the disaster will take advantage of the inevitable discontent arising from efforts to overcome it, for if there is one thing that they are skilled in, it is demagoguery.”

- Theodore Dalrymple

Can you feel it? The tension rising to the red-line? It runs clear through all of Western Civ. We are ruled by governments of fiends. But now, the sun rides higher in the sky. The sap is rising in the northern forests. The earth heaves. The buds swell and blush. Something is in the air. The animals are waking from their long winter sleep. The natives are restless.

The two traditional political divisions, liberal and conservative died with Covid. Now there are simply the sane versus the insane. The sane have had enough of being pushed around by the insane. The insane don’t register much of what reality tries to tell them. They have a body of insane ideas to comfort and protect them from the reality’s rigors. To call that body of ideas an “ideology” is way too polite.That the insane call themselves “progressive,” is a signature of their insanity.

Progress toward what better state of things? Toward a supremacy of fiends, sadists, degenerates, and morons seizing riches and power by every dishonest means possible outside the rule of law and common decency? It’s not even suitable to call them “communists.” They lack the necessary idealism for that.

They don’t expect to put their shoulders to the wheel with their fellow man. They just want to grab your stuff and then kill you so they don’t have to hear any complaints.

The insane do not believe any of the theoretical bullshit they want to force you to swallow. They don’t care about climate change. It’s just a cudgel they use to beat everyone over the head so they can steal your stuff. They don’t care about “democracy.” It’s just a line of bullshit to cover up their election-stealing. Do you suppose that sane people would keep using electronic vote-tabulating machines that were demonstrably connected to the Internet, and thus hackable, if they cared about election integrity? Of course not. They would arrange p.d.q. to junk them and use paper ballots, and only in person at polling places, with “absentee” exceptions only for people out of the country.

The insane do not care about public health. Everything that is known about the Covid-19 vaccinations tells you that they are unsafe and don’t prevent infection or transmission of a flu-like illness that might not even be what it was officially labeled as. Our public health officials in the FDA, the CDC, and in other corners of the Department of health and Human Services, lie about everything they’re responsible for. This week, the CDC (under Director Mandy Cohen) released a 148-page study on myocarditis reactions to mRNA shots. Every word on every page of the document was redacted. The CDC printed countless copies of the report with 148 utterly blank pages, and then proffered them to the news media. How is that not insane?

The insane do not care about the rule of law. The conduct of “Lawfare” is the subversion of the law by dishonest means. It is a species of racketeering. And that is why Lawfare rogues such Marc Elias, Norm Eisen, Andrew Weissmann, Mary McCord, Lisa Monaco, Matthew Graves, and Merrick Garland, should be charged under the federal RICO statutes for conspiring to deprive sane citizens of their rights and property in the many cases related to the 1/6/21 riot at the US Capitol.

It is, so far, an abiding mystery of contemporary history as to how New York Attorney General Letitia James managed to get away with prosecuting a real estate case against Donald Trump that was no more than victimless business-as-usual between a borrower and his lenders. Ms. James ran for that elected office promising to “get” Mr. Trump on something, anything. That is not how the rule of law works. Under the rule of law, first you determine that there is a crime and then look for who did the crime.

Letitia James must be insane and/or pretty stupid. The short-term gain of stealing Mr. Trump’s property under a false color-of-law and creating impediments to his election campaign, will, sooner or later, blow back at her as a matter of malicious prosecution and, plausibly, racketeering as well. (With whom did she conspire to bring this case? We shall find out.) She will eventually be disgraced publicly as her teammate Fani Willis has already been disgraced in Fulton County, Georgia. I’ll tell you something that all sane people now know but won’t talk about for fear of being crushed by the levers of Lawfare: this looks like a concerted effort by people-of-color to railroad people of non-color. If you think that is a good thing for race relations in our country, then you are insane.

Here are a bunch of other things that are insane: Re-litigating the first amendment is insane. It means what it says, and states it plainly. The open border is insane. No credible sovereign polity would allow it. It would be opposed with force, if necessary. Turning children into transsexuals on a wholesale basis is insane, and fiendishly so. Everybody knows that it is not good for the children or for our society as a whole. But fiends got to fiend, and if you try to deprive them of being fiends then you are guilty of “hate.”

The war in Ukraine is insane. We certainly didn’t ignite it in the service of “democracy.” Our pawn there, Mr. Zelensky, canceled the national elections last year. The war was arguably an effort by our CIA to deprive Russia of its market for natgas in Europe, and thus deprive Russia of a great deal of money, that is, of prosperity. The project failed. Russia overcame NATO’s proxy army and found other markets for its gas. Blowing up the Nord Stream pipelines only served to impoverish and weaken our NATO allies, who no longer have affordable gas to run their industries. The leaders of those allies were too insane to recognize that the Nord Stream op was an act-of-war against them. They were also busy destroying themselves, like the USA, with open borders. They will end up in a new medievalism, ruled by savages. You’d have to be insane to arrange that for yourself.

What’s most obviously insane in our country is that the insane party is pretending to nominate the mentally unfit White House place-keeper, “Joe Biden,” for reelection. You would think that if this party wanted to retain power, they would run a candidate who, though insane, was not also visibly senile. But the rank and file of this party are too insane to see that this dodge is not working. They are pretending with all their might that this is okay, that the growing faction of the sane don’t notice.

Sensing the growing impatience with insanity among the voters, the insane party has reached its point of terminal desperation. What will they try next? Murder? Why not? Nothing else seemed to work. They are too far gone in their insanity to understand that winter is over. We’ve entered the season of rebirth and renewal, starting with a renewed appreciation for being sane and for that indispensable ingredient that makes liberty in a free society possible: good faith. Really, the only question left is: how rough do they intend to play to prevent the return of sanity and good faith?

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

Tyler Durden Fri, 03/22/2024 - 16:25

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International

Failed deal leaves another airline facing bankruptcy, liquidation

A planned sale of the airline brand has fallen through, and that leaves its future very much in doubt.

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4 hours ago

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March 22, 2024

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The business model for airlines has always been tricky and multiple major airlines around the world have needed government bailouts in order to survive. Traditionally, because airlines are essential services, that money has been there both in the United States and around the world.  

In the U.S., about $54 billion was given to airlines to help them survive the covid pandemic. Had that not happened, it's very possible a major carrier would have gone bankrupt. More importantly, every carrier would have had to go into survival mode.

Related: Bad meat forces popular grocery brand into Chapter 11 bankruptcy

That would have mean laying off pilots, and other key personnel that could not be replaced quickly. Had the U.S. not ponied up and rescued its airline industry, it's likely that prices for airfare would be highly elevated and overall capacity would be greatly decreased.  

It's a situation that was not unique to the U.S. The former Air Italia actually closed in 2021 but later began flying again as ITA Airways after a government bailout. In addition, Germany's Lufthansa and Sweden's SAS have received bailout packages (although those are being challenged in court).

Now, with Spirit Airlines  (SAVE)  facing an uncertain future and bankruptcy rumors in the U.S., another big airline has seen a major deal collapse, which puts its future in doubt.

The U.S. government blocked a merger between Spirit and Jetblue.

Image source: Shutterstock/TheStreet

South African Airways faces survival risk

While many Americans may not be overly familiar with South African Airlines (SAA). it's part of the global "Star Alliance," which means it's connected to many of the world's biggest airlines.

"The Star Alliance network was formed in 1997 by Air Canada, Lufthansa, Scandinavian Airlines, Thai, and United Airlines. For the first time, these carriers began working together to offer our customers a worldwide reach and an improved travel experience," SAA shared on its website.

The Alliance has gotten much bigger since its early days.

"Since then, the Alliance has grown to 26 member airlines, including South African Airways which joined the Alliance in 2006. The Star Alliance carriers are among the most respected in the world. To become a member, an airline must offer and comply with the highest industry standards of customer service, security and technical infrastructure. The 26 member airlines operate together more than 18,500 flights a day, reaching 1,330 airports in 192 countries," SAA added.

Now, after a failed deal to sell a majority interest in SAA, the airline faces a threat to its survival.

SAA has 12-18 months left

For three years, the government of South Africa has been negotiating to sell a majority interest in SAA to Takatso Consortium. That's a controversial decision that the South African government intends to investigate.

"The Portfolio Committee on Public Enterprises has reached a decision to refer the matter of the Takatso Consortium’s purchase of a 51% stake in South African Airways (SAA) to the Special Investigating Unit (SIU) for further investigation," according to a media statement from the South African Parliament.

The failed sale puts the future of SAA in a very precarious place.

"The government estimates SAA can sustain itself financially for the next 12 to 18 months. The government has also come to the conclusion that the flag carrier will no longer receive any bailout money. SAA will have to survive on its own or find a new merger partner," World Airline News reported.

SAA's problems actually predate the covid pandemic as it was close to being liquidated in 2019 before filing for bankruptcy which allowed it to keep operating.

The pandemic, however, did hasten its breakdown and greatly contributed to its current dire situation. 

Takatso Consortium pulled out because it did not believe the price being asked was a good value.

"At the end of the day it wasn't about the political pressure, the noise that you are hearing. It came down to, businesswise, as an investor, does this make sense for your stakeholders? Can you continue to drag this process along?" consortium spokesperson Thulasizwe Simelane told DW.com.

.

 

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Spread & Containment

GSK to part ways with ‘most’ Bellus Health employees a year after $2B buy

Many of the employees behind GSK’s late-stage investigational drug for chronic cough will be let go at the end of March.
Roberto Bellini
“After having…

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7 hours ago

on

March 22, 2024

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Many of the employees behind GSK’s late-stage investigational drug for chronic cough will be let go at the end of March.

Roberto Bellini

“After having completed the transition activities linked to the GSK acquisition, most Bellus Health employees will be wrapping up their involvement with the company on March 31,” Roberto Bellini, the longtime CEO of Bellus, wrote Thursday on LinkedIn.

A year ago, GSK bought the Canadian biotech for $2 billion for Bellus’ Phase 3 chronic cough candidate, which was expected to compete with Merck’s P2X3 antagonist. That drug was rejected by the FDA for a second time in December.

In his LinkedIn post, Bellini said it was the “end of an era.” He’s now a managing partner at life sciences investor BSquared Capital.

“We’re excited to see GSK complete the last legs of the journey and fulfill our mission of getting this important product to the chronic cough patient community,” Bellini wrote.

GSK, which completed the deal in June, did not disclose the number of roles impacted. In his LinkedIn post, Bellini tagged about 40 people whose profiles list them as Bellus employees.

“During the GSK-Bellus acquisition, we retained employees to a predetermined date to ensure the successful integration of the business,” a GSK spokesperson told Endpoints News. “As often is the case during this process, redundancies may occur.”

GSK is currently running two Phase 3 trials for its lead drug from Bellus, a P2X3 antagonist known as camlipixant or BLU-5937. Data are expected next year, the drugmaker has said.

“We look forward to continuing to drive the CALM Phase 3 clinical development program forward to address the unmet needs of patients living with refractory chronic cough,” the spokesperson wrote.

GSK has described camlipixant as one of its top clinical prospects, and chief commercial officer Luke Miels has said the company projects peak sales in the “single billion dollar” range.

Chronic cough can interrupt daily activities, impair people’s ability to work and disrupt social experiences as some say the condition has been stigmatized due to the Covid-19 pandemic. The pharma has estimated about 10 million people in the US and EU experience refractory chronic cough for more than a year.

Merck has said it’s going through feedback from the FDA’s latest no-go for gefapixant, its chronic cough candidate. The treatment is approved in the EU, Switzerland and Japan.

Other companies in the category include startup Nocion Therapeutics, which this month reeled in $62 million for a Phase 2b this year testing whether its alternative approach to treatment can work. Aldeyra Therapeutics, meanwhile, “deprioritized” its mid-stage treatment candidate in January.

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