Among the primary measures of the success or failure of Netflix Inc. (NASDAQ: NFLX) is whether the subscriber count rises or falls each quarter. The company lost almost a million subscribers last quarter, and it says it will add nearly a million in the current period. The fact is, Netflix subscriber count growth has slowed to near a halt, just as a recession is coming, if it has not begun already. Netflix is no better off than it was when the stock crashed earlier in the year.
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While the stock reacted well to what Netflix called a rebound, up 7% to $216, it is still down from a 52-week high of just above $700. It is unlikely to ever see that peak again. Netflix still spends too much money. Its operating margin used to be 25%. In the current quarter, it is expected to have an operating margin of 16%.

Management described new growth as both a challenge and an opportunity. It will be more the first than the second of these. The streaming sector has become among the most competitive in the consumer economy. Amazon Prime is the primary competition and is owned by one of the largest companies in the United States. Other competition includes Disney+, which is produced by America’s largest media company, and Apple’s Apple TV+. Granted, Apple is far beyond, but it has an installed hardware base and the most powerful balance sheet of any U.S. public company.

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The streaming giants also compete with a large number of niche streamers that circle the large ones like piranhas.

There is no comeback road for Netflix.

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