Key Points
-
Netflix is reportedly considering adding live channels to its streaming service.
-
According to a July 9 Wall Street Journal article, Netflix executives are discussing strategies for boosting subscriber engagement.
-
The streaming giant reports its second-quarter results on Thursday.
- 10 stocks we like better than Netflix ›
On July 9, The Wall Street Journal reported that Netflix (NASDAQ: NFLX) executives have been discussing adding live channels to its service. According to the article, programs, shows, and films from certain genres could be continuously streamed.
That news, coming just ahead of Netflix’s second-quarter report on July 16, could be a warning flag to expect disappointing or underwhelming results.
Keeping subscribers more engaged
Subscriber engagement (the amount of time people spend watching shows and movies on the platform, and how often they finish them) was a talking point at the company’s annual business review in the spring, according to the article. Since then, however, the topic has reportedly come up more frequently.
To address that issue, executives have considered launching the live channels mentioned earlier and creating a bundle with other streaming services, according to The Wall Street Journal.
Having a game plan ready
The idea that Netflix is exploring new options to keep subscribers engaged should not be viewed as a negative. In a competitive space, it will need to continuously evaluate its current business plan, considering what else it could offer or what it may need to pivot away from. But the timing of this news could foreshadow a disappointing quarter.
The talking points for adding live programming or bundles could be proactive measures to address any underwhelming or weak stats in the second-quarter report.
The outlook for Netflix
To be fair, Netflix may still report a great quarter and begin to reverse the downward trend the stock has been on in recent months.
The Wall Street Journal’s reporting about its live programming plans could turn out to be an early preview of a new strategy at the streaming giant. But again, if viewers are spending less time watching its shows and movies and aren’t finishing them at the rates they used to, that points to an issue brewing in terms of its ability to hold onto its subscribers.
I still like Netflix’s potential as a long-term investment, considering its opportunities to grow revenue through its gaming division, video podcasting, and its entertainment complex concept, Netflix House. But the Q2 report may not offer much to help reignite investor enthusiasm in the short term.
Should you buy stock in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $396,542!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,299,961!*
Now, it’s worth noting Stock Advisor’s total average return is 931% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
