Netflix, Disney stocks drop on news of Apple TV+ pricing

The shares of Netflix (NFLX) and Disney (DIS) fell sharply on Tuesday, after streaming rival Apple announced its long-awaited Apple TV+ subscription would cost $4.99 — a rock-bottom level that undercuts the pricing on both services.

At its event, Apple (AAPL) unveiled the platform’s pricing, along with new devices and a show that would feature Jason Momoa, the star of “Aquaman” and “Game of Thrones.”

However, it was Apple TV+’s low subscription price that caught the attention of investors. Some speculated that the tech giant would make its offering more competitive with its peers around $9.99.

Amid a debate on whether viewers would embrace yet another online content service, both Netflix and Disney saw their stocks tumble. The latter’s upcoming streaming platform is priced at $6.99, while Netflix’s runs from $8.99 up to $15.99.

Netflix ended the session down over 2% around $288, while Disney also shed more than 2% to $136. Meanwhile, streaming content provider Roku (ROKU) swooned by around 11% on the TV+ news.

Wedbush analyst Dan Ives called the platform’s pricing “a major shot across the bow” at competitors, including Netflix and Disney.

Wall Street “was anticipating a $7.99-$9.99 price point as clearly Cupertino is looking for market share coming out of the gates with these surprising price points that we loudly applaud,” he added.

Given the relatively slim number of shows on Apple TV+, some analysts say its immediate effect on the streaming market is likely to be limited.

The platform “is an interesting start and could turn into an attractive service that combines proprietary content and third-party aggregation, but at this point the limited amount of content available will likely mute user engagement,” analysts at Piper Jaffray wrote on Tuesday.

“We do not expect [TV+ and Arcade] to be materially additive to Apple estimates for at least the next couple of years, however, they do re-emphasize that the company is very focused on enhancing services and growing services revenue per user,” the note said.

The broader market ended little changed, with losses contained by a report that China was considering a deal to purchase more American goods ahead of the next round of trade meetings between U.S. and Chinese negotiators.

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