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Netflix Shares Drop After HBO Reveals Plans for Internet-Based Streaming Service

Netflix’s stock slipped about 2% after HBO made a surprise announcement that it would launch a standalone, over-the-top U.S. streaming service in 2015 — representing a potentially robust new competitor to the No. 1 subscription VOD service.

Shares of Netflix, which closed at $449.12 per share Tuesday, dropped as low as $430.18 after the HBO news. The stock had been trading below $440 per share but fell further after HBO’s announcement shortly before 11 a.m. Eastern.

Netflix is scheduled to release third-quarter 2014 earnings results after market close Wednesday. Investors are looking for the company to grow its international subscriber base, as well as continue its U.S. momentum.

HBO CEO Richard Plepler, speaking at Time Warner’s Investor Day event, announced that the company will offer a standalone HBO streaming service in 2015, citing the opportunity to reach 80 million households that don’t subscribe to the premium cabler.

“That is a large and growing opportunity that should no longer be left untapped,” Plepler said. “It is time to remove all barriers to those who want HBO.”

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