Netflix (NFLX -2.49%) has not been doing well this year, and things could get even worse. While a significant drop-off in the streaming king's share price may appear to be unlikely, here are three reasons why it wouldn't be surprising.

Growth has been a challenge

Investors have normally looked to the company's subscriber numbers as an indicator of its overall performance, and that's already starting to cause some concern. Netflix has been struggling to find ways to grow in the domestic market. Its saving grace has been the company's international growth.

  31-Mar 2017 31-Mar 2018 31-Mar 2019
Paid memberships (Domestic)-in Thousands 49,375 55,087 60,229
Paid memberships (International)-in Thousands 44,988 63,815 88,634

Data source: Netflix

From March 2017 to March 2019, domestic paid memberships rose by just 22% while international ones grew by 97%. International memberships now make up a majority 60% of total paid memberships, compared to less than 50% just two years ago. This is a problem because the company's contribution margin, which is the segment's sales less its cost of sales and marketing, this past quarter from the domestic market was 35.8% compared to 14% for international. That means growing internationally but not domestically won't make its bottom line any stronger. 

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A low margin from its international operations shouldn't come as a surprise, however, given that some of the cheapest prices the company offers are in the international markets. Recently, the company announced it would be rolling out a mobile plan in India that would cost less than $3. International growth is not going to help the company's financials enough if the domestic numbers continue struggling.

Competition on the horizon

It's been known for a while that Walt Disney (DIS -0.28%) was getting into streaming, and that day is inching closer and closer. It's a twofold problem for Netflix because it means that not only will it be losing some great content as a result, but it'll now have to compete against that very same content. This is not a new trend as media companies have been opting to provide their own streaming services rather than go through Netflix.

The biggest issue isn't necessarily that there will be more options for consumers, it's how well Netflix will be able to compete head-to-head with Disney when it comes to content. While Netflix has done a great job of creating its own content to supplement its existing library, whether that same content will be able to persuade consumers to keep a Netflix subscription over Disney+, or to keep both, will be the real test. The Disney+ subscription will cost just $6.99 and includes HD viewing, which undercuts even Netflix's lowest plan of $8.99, which doesn't include HD. The most popular Netflix plan costs $13.

Investors who are still bullish on Netflix essentially have to believe that Disney will be beaten at its own game, which might be a long shot.

The stock is still overvalued

If Netflix were trading at a more modest multiple, then there would be less concern that it's about to see an epic sell-off of its shares. However, with the stock still trading at more than 100 times its earnings and 20 times its book value, it's hard not to see a scenario where a big correction takes place.

By comparison, Disney trades at just 17 times its earnings. For Netflix to fall to $200, the stock would still be trading at a multiple of about 78 times its profits over the past four quarters. While a 30% drop isn't going to happen overnight, it's a very real possibility for Netflix over the next 12 months, unless it can win what's sure to be a tough battle for the company.