May 27, 2020

Netflix’s stock drops again, heads for longest losing streak in 10 months

[MarketWatch, Getty Images]

Netflix selloff comes as HBO Max launches, stocks boosted by coronavirus-related lockdown measures pull back

Shares of Netflix Inc. fell again Wednesday, putting them on track for the longest losing streak since last summer, as the launch of the rival HBO Max service and investor optimism over the easing of coronavirus-related lockdown requirements helped dull the outlook for the streaming video service.

Netflix’s stock NFLX, -0.66% dropped 1.8% in active midday trading. The stock was headed for the seventh-straight decline, and has lost 10.3% since closing at a record $454.19 on May 15.

A lower close would mark the longest streak of losses since the nine-day stretch ended July 23, 2019.

Last year’s losing streak was punctuated by a 10.3% tumble on July 18 following a disappointing earnings report, while the current streak’s biggest loss was 3.4% on Tuesday.

In contrast, shares of AT&T Inc. T, +3.40% , the parent of HBO Max, rallied 3.4%, and has gained 10.0% amid a five-day win streak. HBO Max launches Wednesday with a monthly subscription price of $14.99 for non-AT&T customers, compared with Netflix’s “Standard” plan of $12.99 a month.

FactSet, MarketWatch

Netflix’s stock had been on a tear before the losing streak began. From the March closing low of $298.84 on March 16 to the May 15 record, the stock had rocketed 52.0%, to add over $68.3 billion to its market capitalization, as the company was viewed by investors as a beneficiary of stay-at-home measures implemented to slow the spread of the COVID-19 virus.

The stock handily outperformed its large-cap technology peers and the broader market, as the tech-heavy Nasdaq-100 index NDX, -0.67% rose 30.4% over the same time and the S&P 500 index SPX, +0.37% gained 20.0%.

John Stankey, CEO of WarnerMedia, speaks Tuesday in Burbank, Calif.

Last week, Benchmark analyst Matthew Harrigan reiterated his sell rating on Netflix, saying he believed the stock was “quite vulnerable” to any market rotation out of COVID-19 safe-haven names. At that time, he wrote in a note to clients that the imminent launch of HBO Max, and the broad launch of Comcast Corp.’s CMCSA, +0.99% Peacock service in July, “could also curb the market’s rampant enthusiasm, as might the creeping return of live sports as a viewing alternative.”

Meanwhile, other “highflying ‘shelter-in-place’ names” have seen momentum wane recently, as investors have started rotating into more cyclical areas as COVID-19 related restrictions ease, as MarketWatch’s Steve Goldstein reported in Wednesday’s “Need to Know,” which sourced Julian Emanuel, BTIG’s chief equity and derivatives strategist. Inc.’s stock AMZN, -1.11% fell 1.4% on Wednesday, and has shed 4.4% amid a four-day run of losses. The losing streak snapped a six-day stretch of gains that ended with a record close of $2,497.94 on May 20, which was 47.9% above its May 16 close of $1,689.15.

Another other COVID-19 highfliers that reached record highs in the past week, shares of Zoom Video Communications Inc. ZM, -3.87% slumped 4.1% and was headed for a fourth straight decline and Nvidia Corp. NVDA, -4.80% sank 4.9% after falling 3.4% on Tuesday.

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