Netflix Rout Is Worst Since 2004, Punishing Roku and Disney, Too
Netflix Inc. investors punished the company for its shock loss in subscribers and abrupt turnabout to embrace advertising after years of shunning it.
Shares of the streaming leader plunged 35%, erasing $54 billion of market value in its biggest drop since 2004. The swoon made Netflix the worst-performing stock of the year on both the benchmark S&P 500 and Nasdaq 100 indexes and sent shock waves across the media universe, sinking Warner Bros. Discovery Inc., Roku Inc. and others.
Netflix is seeking ways to stop a loss of subscribers and combat investor fears that its best days are over. Co-founder Reed Hastings had said for years that he doesn’t want to offer advertising and had no problems with password sharing.
But the company is changing course after losing 200,000 customers in the first quarter, the first time it has shed subscribers since 2011. Netflix also projected it will shrink by another 2 million customers in the current quarter, a huge setback for a company that regularly grew by 25 million subscribers or more a year. Netflix also will curb its spending on films and TV shows in response to the customer losses.
“It’s just shocking,” said analyst Michael Nathanson of MoffettNathanson LLC. “Everything they’ve tried to convince me of over the last five years was given up in one quarter. It’s such an about face.”
Investors, analysts and Hollywood executives had been bracing for the company to report a sluggish start to the year, but Wall Street still expected Netflix to add 2.5 million customers in the first quarter. The shares were already down more than 40% this year.
Hastings and co-Chief Executive Officer Ted Sarandos had previously dismissed the company’s slowing subscriber sign-ups as a speed bump related to the
Read more on tech.hindustantimes.com
