Netflix shed $58 billion in market value on Wednesday after dismal quarterly subscriber numbers prompted a sharp drop in its shares that also spread to rival streaming groups.
California-based Netflix said late Tuesday that its decades of subscriber growth came to an end in the first quarter of 2022 and that many markets had “become more difficult to attract members.”
In an earnings update, the streaming company forecast that subscribers would fall by another 2 million in the current quarter, after already falling by about 200,000 in the previous three months.
Netflix shares fell more than 38 percent in morning trade in New York on Wednesday.
The “sea-change quarter” prompted JPMorgan to lower its Netflix rating from “overweight” to “neutral,” with US bank analysts citing concerns about account sharing, market saturation and increasing competition.
Netflix’s announcement also hit the stocks of other television and movie subscription companies. Walt Disney, owner of streaming service Disney Plus, fell more than 5 percent, while streaming platform and hardware company Roku tumbled about 7 percent. The music streaming service Spotify collapsed by more than 7 percent.
Streaming services and stay-at-home stocks have “depreciated sharply in recent months,” said Patrick Armstrong, Plurimi Group’s chief investment officer. “The market expected it, but nobody expected it [Netflix] Subscriber losses as dramatic as they were.”
The US S&P 500 index defied the decline in Netflix shares and traded broadly flat. The tech-heavy Nasdaq Composite lost nearly 1 percent.
In Europe, the regional Stoxx 600 was up 0.8 percent in afternoon trade, reversing the previous day’s decline.
In Treasury markets, the 10-year Treasury yield fell 0.04 percentage point to 2.87 percent.
Additional reporting by Ian Johnston