With subscribers leaving by the hundreds of thousands, Netflix stocks lost more than $50 billion yesterday. To date, the company’s stock dropped more than 40% in value this year-to-date. Netflix reported. At present, Netflix stocks are trading at $218.22, their lowest since 2018.
Netflix Stocks Plummet By 35%
Netflix stocks took a serious beating this week when the company reported losing subscribers for the first time since 2011. Shares plummeted by 35% Wednesday morning and continued to freefall heading into the weekend.
Analysts estimate that Netflix lost more than $50 billion in market capitalization since the report. Even worse, the streaming company already lost 40% of its value year-to-date.
From a dismal 2022, Netflix’s year is now officially a disaster. Previously, the company was the darling of analysts who saw it as a pioneering company that could overhaul the entertainment industry.
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Now, investors are more concerned about Netflix’s growth moving forward. In addition, questions are now rising over the future of the company and the streaming industry in general.
Netflix Lost 200,000 Subscribers in Q1 When It Expected 2.5 Million New Ones
On Tuesday, Netflix reported losing 200,000 subscribers during the first quarter of 2022. This may seem like a small number compared to the company’s 221 million subscriber base.
However, Wall Street expected an additional 2.5 million new subscribers for the quarter. As such, this is a sign that Netflix’s growth isn’t slowing down, it’s creeping backward.
Then, add the fact that the company now expects to lose another 2 million for the current quarter. Consequently, this becomes more than enough reason for Netflix stocks to plummet, which is what’s happening now.
Why Netflix Stocks Tanked
Simply put, some analysts view Netflix’s drop as a result of changing conditions. The pandemic that forced people into their homes also gave Netflix a steady audience to watch its content.
It’s not just Netflix, other services such as Disney+, HBO, Amazon, and Apple also saw their subscribers increase.
Now that many people went back to work, fewer people now have the time to binge-watch at home. Michael Nathanson, the media analyst at MoffettNathanson, said it’s different now.
“What worked until this point may not be working anymore. The world’s changed,” he said. Instead of asking “What’s next for Netflix?,” investors are asking “Now, what?,” and “How can Netflix stocks rise again?”
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Netflix Blames Password Sharing
In addition, the company pointed to a host of factors as to why subscribers are heading for the unsubscribe button. This includes heightened competition, as more media giants like Disney, HBO, Amazon, and Apple ramp up their lineups.
However, Netflix amusingly blamed the proliferation of password sharing as one of the major reasons for losing subscribers.
As a result, the company now plans to limit password sharing within a single household. Netflix will likely impose added charges on subscribers who log in from a separate location.
Currently, the company is testing the stricter password sharing scheme in select countries in central and south America. However, Analysts warned that charging extra for extra logs might backfire.
Nathanson said that any additional charges might turn off its base, especially since Netflix recently imposed a round of subscription hikes. If this happens, expect Netflix stocks to further slump.
Watch The John Campea Show video reporting that Netflix lost $54 Billion in one day:
Will Netflix stocks eventually recover some of their lost value? Can the company turn itself around?
Tell us what you think about the saga of Netflix. Share your thoughts in the comments section below.