The big news from Time Warner's (TWX) HBO that the company will bring to market a standalone streaming service next year, which will directly compete with the Netflix model. Though this news was met with a lukewarm reaction mid-day today, the lowered guidance seemed to reflect poorly for Netflix on this developnment. Netflix acknowledged the HBO news in its note to shareholders today, but put a positive spin on the development by saying, "…[W]e think it is likely we both prosper as consumers move to Internet TV," calling the HBO move "inevitable and sensible."
None of this has been taken well by after-hours traders, however — Netflix has currently sold off all of its considerable gains year to date. This is a considerably drastic immediate devaluation of a recent tech/entertainment high-flyer on the NASDAQ. But as analysts parse through the game-changing nature of the HBO development, early conclusions are that Netflix is no longer in the catbird seat of home entertainment.
Getting back to the nuts and bolts of the earnings report, however, operating income has nearly doubled year over year. Market launches in Europe and expanding its original content have helped Netflix keep pace with analyst expectations for the most part. The company boasts over 53 million global members and $1.22 billion in revenue over the past 3 months.
Clearly, however, investors see Netflix existing on a shifting plate teutonic, and are abandoning the stock in droves. Netflix currently is a Zacks Rank #3 (Hold) stock.
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