With the value of Netflix down by 30% in three months, investors will be looking carefully at its subscriber figures for the third quarter of the year. After failing to meet its own forecasts in the second quarter, Netflix numbers will need to impress if it is to maintain market sentiment.

At the start of October 2019, Netflix shares were trading at around $270, down from a 52-week high of $386, at around the same level as the start of the year, compared to $210 at the start of 2018, although a long way above $130 at the start of 2017.

In July, Netflix reported that it had 60.10 million paid memberships in the United States, which was 126,000 fewer than it had three months previously, experiencing its first net subscriber loss in its home market. Netflix also fell short of its own forecast, which anticipated an increase to 60.53 million paid members in the United States.

That somehow surprised investors, although it should be clear that the more subscribers a service has in a market the harder it becomes to add more. Nevertheless, it may be that Netflix is approaching market saturation at 60 million subscribers in the United States, a market of some 120 million television homes, or over 96% of all households in the country.

Netflix grew its subscriber base outside the United States in the second quarter by 2.83 million to 91.46 million, again falling short of its own forecast. The opportunities for growth there are clearly larger, with over a billion homes worldwide paying for television services.

Yet while Netflix added 10.69 million subscribers outside the United States in the first half of 2019, that was only marginally more than the 10.56 million it added in the corresponding period the previous year.

The value of Netflix is based on positive market sentiment and assumptions of continuing subscriber growth.

Netflix now faces a more crowded competitive market. Disney is entering with its own offering, which will enable it to bundle Disney+, ESPN+ and Hulu for around the same price as Netflix.

The current valuation of Netflix seems irrational to some analysts, while others see it increasing further.

So, all analyst and investor eyes will be on the numbers that Netflix reports on 16 October. Netflix is forecasting that it will have added 7 million subscribers globally in the third quarter of 2019, compared to 6 million the same quarter the previous year. That would give it a total of 158.56 million, which is still a substantial number. Anything less will disappoint the market.