Shares of Netflix lost 35.12% in New York on Wednesday after it reported its first drop in subscribers in a decade the day before, leaving Wall Street questioning its growth in the face of fierce competition and viewer fatigue after the pandemic.
Shares of the streaming pioneer fell to $226.19 on its worst trading day in a decade. That drop cost him a loss of $54.35 billion in cap value in one day.
At least a dozen analysts were quick to temper their views on a stock that has been an outstanding performer in recent years. “Netflix is an example of what happens to growth companies when they lose their growth,” said Kim Forrest, Chief Investment Officer at Bokeh Capital Partners.
“People buy growth companies because they think their cash flow is going to grow, so they pay up front to anticipate that. When a stock like this falls, people looking for growth quickly pull out,” he added.
For its part, investment bank JPMorgan was the most aggressive in halving its price target to $305, well below Wall Street’s median target of $400.
The plunge in shares could erase the gain of the last two years, when his business boomed, as new customers joined his platform to get around lockdowns.
In an effort to calm nerves, Netflix executives told analysts on Tuesday that they were looking into offering an ad-supported service for the next year or two and vowed to crack down on password sharing, a long-standing problem for Netflix. service.
Netflix’s rivals already have ad-supported versions or are considering one: HBO Max offers an ad-supported subscription, while Disney+ recently said it would launch an ad-supported service.
The demand for fresh and engaging content is also on the rise, forcing Netflix and others to consider bigger budgets for production, even as costs rise in an inflationary environment.
He takes them to the dance
Shares of Disney, Roku and other streaming service companies fell, dragged down by the drop in Netflix. Investors punished Netflix after its unexpected loss of subscribers and warning that it expects to lose many more.
Disney (Disney+ and Hulu) fell 5.56% to $124.58, while Roku declined 6.17% to $109.57, hitting its lowest price in a month to hit an intraday low of $106.37.
For its part, Warner Bros, Discovery, whose platforms are HBO Max, Discovery + and CNN +, lost 6.04% to 23.11 dollars.
Stocks took pressure after Netflix said on Tuesday it lost 200,000 subscribers in the first quarter.
As a whole, the streaming companies lost 72.265 million dollars in capitalization value, in a single day.
Netflix suffered its first loss of subscribers since 2011 and had previously projected adding 2.5 million for the first quarter. Netflix expects to lose 2 million subscribers in the current quarter. (With information from agencies)