Netflix Stock Just Completely Crashed

By Jason Collins | 4 months ago

netflix walkout

Netflix Stock just completely crashed, as they fell as much as 24.27% in trading, plummeting from $508.25 to 384.85 % in less than 24 hours. Admittedly, their value managed to crawl back up just barely above the $400 mark. If the stocks remain down, it will be the worst day for Netflix since July 25, 2012, when shares fell by 25%, and the worst week since July 27, 2012, when stocks fell about 28%. The current fall varies around 20% to 21% compared to the initial value of Netflix’s stocks.

Despite beating any expectations for quarterly earnings and revenue expectations, Netflix missed its target subscriber count by just 200,000, rounding the current number at 8.3 million subscribers vs. the expected 8.5 million, which triggered alarm bells, and apparently made the company’s investors nervous. However, according to the report published by Deadline, Netflix’s top executives couldn’t identify any one cause for the slowdown in subscriber growth, reiterating confidence in the company’s overall trajectory. Of course, the company’s investors were quick to point towards competition, but considering Netflix’s prominence on the streaming market, the company hardly has any serious competition, despite the rise of Disney+ or other streaming services.

In terms of users spending time off the platform, Netflix has sleep and the user’s work schedule as the only potential competition. Let’s admit it; those are almost impossible to tackle and overthrow. However, market analysts weren’t convinced, and many opted to lower their ratings on Netflix and trim their price targets, acknowledging lackluster subscriber growth as the main reason behind the drop. The most notorious player on the stock market, Michael Patcher, advised his clients alluding to his long-term and often misplaced pessimism regarding Netflix. He described Netflix as a low-growth, extremely profitable enterprise.

netflix crash

That’s hardly true, considering the average 26.5 million subscribers over the past five years, but the numbers don’t lie, and Netflix’s “failure” to hit the target subscriber count indicates that Patcher might be right. Moreover, many analysts have pointed out numerous reasons why investors should pump the breaks on Netflix and other streaming services in general, considering that media companies are pouring billions into streaming, and the market is bound to become saturated. For years, many analysts wondered whether streaming is a good business while advising their clients to tread carefully, and many have even lost clients that were impressed by Netflix’s massive equity returns. Now it seems that the advice given by analysts was sound.

With that said, despite its growing popularity, streaming is still in early transition stages from the traditional allure of cable and network TV, and opportunities like gaming features, interactive content, and merchandising have yet to take hold. These could potentially help drive Netflix’s stock value up, back to, and above the previous value. Netflix announced its venture into gaming territory in an attempt to diversify its content less than a year ago. It acquired a few gaming studios and the gaming world’s prominent figures, only to launch its gaming service to Android users three months ago, followed by the iOS launch sometime later. How and whether those additional services will help bring Netflix’s value back up, remains to be seen.