Reed Hastings, the top shareholder of Netflix (NFLX), has lost hundreds of millions of dollars since the stock hit a yearly high in May.
With the stock having wiped out all 2019’s gains as competition heats up, the market cap of Netflix has gone down by over $50 billion.
Hastings, the Netflix co-founder, chairman and CEO who owns approximately 2.48% of the online video streaming giant, has lost roughly $1.3 billion of his stake in the company on paper.
On Monday Netflix finished 0.7% lower than the stock’s closing price on its first day of trading in January. Before the stock started reversing course in July following a decline in U.S. subscribers, Netflix had recorded gains of 46% for 2019.
The drop has come at a time when there is increasing competition in the streaming space with Apple and Disney planning to launch new services that are priced lower than Netflix’s offerings.
Apple’s forthcoming streaming service, which plans to launch in November, will charge $4.99 per month. The monthly charge for Disney+ subscribers will be $6.99. Netflix’s most popular plan in the U.S. costs $12.99 a month, though some of its global subscription costs are lower.
The increasingly competitive landscape is expected to change Netflix’s fortunes significantly. Less than a week ago, Reed Hastings warned that the streaming giant would be entering a “whole new world” in November when Apple and Disney join the race.
Besides its growth in subscriber numbers possibly taking a hit, the entry of Apple and Disney is also likely to raise production costs. According to Hastings, this is because Netflix will be banking on increasing its content portfolio in order to encourage “binge-watching.” a practice it has helped popularize.
Over the weekend, Netflix lost the crown for the most Emmys for online video to its rival Amazon Prime Video. Netflix took home four Emmys while Amazon Prime Video bagged 7 trophies.
Despite the stock having wiped out all its gains for the year, some Wall Street analysts are still bullish for the long term. Pivotal, for instance, has set a price target of $350. The Wall Street firm expects the streaming giant to maintain subscriber growth by unveiling more content. However, this will come at the cost of profitability:
Our new forecasts imply they [Netflix] are going to respond to content cost acceleration by revving up their own content spend that will allow them to maintain their subscriber growth while pushing back profitability materially.
According to Pivotal, the biggest threat to Netflix’s dominance is Disney+ with Amazon Prime Video on the “periphery” and HBO hampered by its parent company AT&T.