Due to the drop in demand for streaming services, Netflix shares have dropped. That could drag down the Apple TV+ and the Cupertino stock.
Netflix stock (NASDAQ:NFLX) Investors were reeling on Thursday. Shares are down 40% in the trading, down $60 billion due to poor subscriber data in the first quarter.
Apple Stock (NASDAQ:AAPL). The Apple Inc. report did not avoid the decline in tech companies. Cupertino shares also dropped on April 20, but slightly by 0.1%.
Could Netflix’s quarterly developments hurt Apple’s financial performance and stock price in the future? This issue is viewed from many angles by Apple Maven.
Streaming Services Inside The Penalty Box
Bad news for Apple and other companies offering a video streaming service: Netflix’s first-quarter drop in membership indicates industry weakness.
Los Gatos Corporation identified several reasons for its loss of 200,000 customers in the first quarter, the first negative net addition impression in a decade. The main arguments can affect all streamers, not just Netflix.
There are also the consequences of COVID-19 and post-pandemic implications. After months of being confined to the home, which has helped increase demand for video streaming services, consumers are now eager to get out of the house and engage in offline activities.
However, the end of lockdowns does not tell the whole story. Netflix admitted that the post-COVID narrative about headwinds hid deeper concerns that are now being revealed.
Netflix, for example, seems to believe that the target market of Internet-enabled homes is slow to adopt on-demand entertainment. These issues included high data prices and the adoption of tethered TVs.
In recent years, there has been a lot of competition. Today, every major media company has at least one streaming service. For example, Disney (DIS) – Get Walt Disney Company Report offers Disney+, Hulu, and ESPN+. On the other hand, Paramount Global (PARA) has Paramount+ and Pluto TV.
Netflix also cited broad geopolitical and macroeconomic factors to justify the loss of customers. For example, there is talk of a looming recession due to rising inflation, rising interest rates, and turmoil in Eastern Europe.
Not Everything Can Be Wrong For Apple.
If all of the above is true, this could pose a problem for Apple TV+ and its Apple TV+ streaming service. However, analysts believe AAPL investors shouldn’t worry too much.
Apple TV+ is a small percentage of overall profits. That is because Apple does not publish data on earnings and sales by service. However, Apple TV+ is believed to contribute 1% of total revenue.
However, this does not mean that Apple TV+ has been forgotten in the Cupertino ecosystem. A slowdown in demand for streaming services is more likely to affect a pure company like Netflix than a tech giant like Apple.
There’s also a significant question: how much of Netflix’s recent problems can be attributed to lower demand than its competitors? Netflix is the market leader, and more competition can be harmful to it than to the incumbents.
Apple may be taking part in Netflix. TV+ was the first streaming service to win an Oscar for best picture with CODA. Apple’s streaming service will likely get more attention after the award. As a result, its current market stock of 5% (which has dramatically increased in the last couple of years) could rise even further.
