Netflix shares fall more than 35% after streamer loses over 200,000 subscribers | Netflix

Shares of Netflix shed more than 35% of their value in New York on Wednesday morning after the streaming giant revealed it had lost more than 200,000 subscribers in the first three months of the year, saying and expecting it to during the year will lose another 2 million next quarter.

The sharp drop in value — the biggest for the service in over a decade — comes as subscribers reassess their commitment to streaming services, whose numbers have soared over the months of the home lockdown. Netflix had expected it to add 2.5 million subscribers in the first quarter.

A number of competing services have also entered the market, including Disney, Warner Bros Discovery and Paramount, which often have larger content libraries to draw from. Netflix stock, which has already fallen 40% this year, is now down from $700 in November to $244 on market open, down nearly two-thirds.

The company said Tuesday it was experiencing “headwinds in revenue growth.” Recently, subscription prices have been raised despite signs of a slowdown in consumer growth, with a basic monthly package now costing US customers $15.49.

“We’re definitely feeling increased market penetration… and increased competition,” said Ted Sarandos, Co-CEO.

In terms of capitalization, Netflix is ​​now worth $109 billion, a number that will make it harder for Los Gatos, California-based management to raise money to fund the investment to produce content from which subscriber growth was dependent.

The confluence of negative forces, from the end of the pandemic, the loss of 700,000 subscribers in Russia, high consumer inflation in many leading markets, forcing households to rethink their budgets, has hit the service.

Elon Musk, the Tesla CEO who is currently launching a hostile takeover bid for Twitter, claimed that “woke-mind virus” was behind Netflix’s stock plunge — not competition, passwords, or inflationary pressures. “The wake mind virus makes Netflix unwatchable,” Musk tweeted.

Wednesday’s plunge follows a period of spectacular growth for the company combined with investor demand for the stock. Netflix, like Peloton and GameStop, benefited from cash flowing through economies during the pandemic, fueling demand for stocks.

Netflix stock is up 86% from the end of 2019 through 2021, while the S&P 500 is up 48%.

Reed Hastings, co-CEO, said that tackling account sharing is now a priority for the company. An estimated 100 million households use accounts they don’t pay for. “When we were growing fast it wasn’t a high priority, but now we’re working very hard on it,” Hastings said.

The company also said it will seek to spur growth by improving the “quality of our programming” and is considering introducing a lower-priced, ad-supported subscription option.

“I was against the complexity of advertising and a big fan of the simplicity of subscriptions,” Hastings said Tuesday. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice.”

“No one expected Netflix to announce that they were losing subscribers. They expected subscriptions to slow down, but seeing Netflix lose subscribers is a big deal,” Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, an online brokerage, told The Wall Street Journal.

“People ask, ‘Is it worth it?'” Ozkardeskaya said. “As prices go up, the value threshold gets pulled higher, and that pushes people to exit.”