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Short sellers pile on Netflix as Disney and Apple competition looms

James Titcomb
Netflix is fighting back against the competition with a slate of fresh programming, such as a new series of The Crown - PA

Short sellers are betting on Netflix succumbing to aggressive competition from Disney and Apple as the streaming giant faces its biggest challenge yet.

Disney and Apple are preparing to launch cut-price video streaming services within a month, undercutting Netflix’s monthly charges. Shares in Netflix have fallen by 25pc in three months, and several Wall Street analysts have cut price targets for it ahead of third-quarter results on Wednesday.

Short sellers – who borrow shares in a company and sell them, predicting they will be able to make a profit by buying them back at a lower price when stock falls – have taken out a $6bn (£4.7bn) bet against Netflix, according to data from S3 Partners.

Around 5.2pc of its shares were out on loan last week, up from 3.2pc at the start of the year.

Apple TV Plus is due to launch in 100 countries at the start of November, with Disney’s service to follow two weeks later. Netflix is fighting a defensive action against the two launches  with a slate of fresh programming, such as a new series of The Crown and film releases including Martin Scorsese’s The Irishman.

Reed Hastings, Netflix chief executive, has previously played down competition, saying most of its subscribers come from broadcast television. But speaking in Cambridge last month, he said new rivals could change that.

“While we’ve been competing with many people in the last decade, it’s a whole new world starting in November,” he said. “It’ll be tough competition. Direct-to-consumer [customers] will have a lot of choice.”

This week, investors are likely to focus on its forecasts for the fourth quarter, when rival services launch. Goldman Sachs said it expects Netflix to shrug off competition, and that Netflix will predict 9.4m new subscribers in the final three months of the year, up from 6.7m in the third quarter.