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Guess what WarnerMedia’s HBO Max announcement did to Netflix stock

Guess what WarnerMedia’s HBO Max announcement did to Netflix stock
[Photo: Thibault Penin/Unsplash]

The gauntlet was thrown down. A few gauntlets, actually. But none of the typical warning signs seem to make much difference to Netflix Inc.

After WarnerMedia announced the name of its HBO-branded streaming service this afternoon, the news was met with a collective shrug on Wall Street as Netflix investors appeared to barely flinch at the sight of yet another major competitor.

Shares of Netflix dipped about 1.3% after the service, called HBO Max, was announced, but it was barely a blip in the company’s performance, as the stock still ended the day about 1% above its opening price. Netflix is due to report second-quarter earnings next week, and analysts are expecting solid results. As Barron’s reported today, the company’s subscriber base likely saw an uptick in anticipation of the third season of Stranger Things, which dropped on July 4. Netflix said Monday that about 40.7 million households are already watching the series.

Which could be one reason why the market barely reacted to today’s news about HBO Max, despite the fact that it will include the enduringly popular sitcom Friends, which will leave Netflix in 2020 to join WarnerMedia’s new service. Heck, Netflix even seemed to welcome the new competition by bidding Friends a fond farewell on Twitter.

Perhaps the Netflix bulls are being overly optimistic? However you look at it, the landscape is changing for the streaming giant, which is facing new competition from major players like HBO Max, Disney+, and NBCUniversal, to say nothing of Hulu, Amazon Prime, and the smattering of smaller services that are pushing the streaming world toward ever-increasing fragmentation.

Nevertheless, Netflix persists. Its shares are up 42% since the beginning of this year, and if it meets expectations next week, that number will enjoy another bump, proving yet again that the company is in a weight class all its own—competitors be damned. Still, one wonders how long it will be before that momentum is undone by streaming TV’s great unbundling.

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