Elon Musk says ‘woke mind virus’ making Netflix ‘unwatchable,’ causing subscribers to flee
Netflix Inc. shares were on course for their worst day in years after the streaming giant reported that it lost subscribers in the first quarter.
Shares shed a quarter of their value in premarket trading Wednesday. Investors had expected that the company would add new users in the first quarter. Instead, Netflix said it ended the first three months of the year with 200,000 fewer subscribers than it had in the fourth quarter and said it expected to lose two million global subscribers in the current quarter.
If the 26% fall in premarket trading holds later in the day, it would set Netflix on course for its biggest daily share price fall in nearly a decade. The drop would slash around $40 billion of its market capitalization, which stood at $157 billion on Tuesday, according to FactSet.
It is the second time the shares have tumbled this year. In January, Netflix shares slid more than 20% when the streaming company said it expected to add a much smaller number of subscribers than it did one year prior. The last time Netflix shares fell 25% on a single day was July 25, 2012, according to FactSet, a day after the company warned of slowing growth for its subscription service.
Not counting the premarket plunge, the stock was down more than 40% for the year through Tuesday.
Click Here to Watch the Newest We the People Convention News & Opinion Podcast!
Netflix is one of the original FANG stocks, a quartet of large internet companies that reflect the dominance of tech stocks on U.S. markets. The others are Facebook -owner Meta Platforms Inc., Amazon.com Inc. and Google-owner Alphabet Inc. Some analysts also include Apple Inc.
Stock futures tied to the tech-heavy Nasdaq-100 were down around 0.2% early Wednesday.
Users flocked to Netflix in the initial months of the coronavirus pandemic as lockdowns and measures to contain the virus kept people at home, sending the company’s share price to record highs. Easing of restrictions and an increase in competition from other streaming services over the past year have presented hurdles to Netflix’s growth.
Musk Says Twitter Board Will Be Paid Nothing If He Takes Over
“Nobody was expecting Netflix to announce they lost subscribers. They were expecting a slowdown in subscriptions, but seeing Netflix losing subscribers is a big deal,” said Ipek Ozkardeskaya, senior analyst atSwissquote Bank, an online broker.Netflix said it is exploring offering a lower priced ad-supported version of the platform to boost its subscriber base, a shift for a company that has sold itself since its inception as a commercial-free haven for its members. The company had increased its subscription fee earlier this year.
The growing number of streaming options has made consumers more price- sensitive. Netflix is among the few major streaming services that has yet to entertain offering a cheaper, ad-supported option. Walt Disney Co. ’s Hulu has long done so, while Warner Bros. Discovery Inc. ’s HBO Max and Disney+ have also pushed into ad-supported streaming.
The step adds to investor worries that rising prices will curtail consumer spending on nonessential goods and services.
“People are asking ‘Is this worth it?’” Ms. Ozkardeskaya said. “As prices rise, the worth threshold is being pulled higher and that’s pushing people to the exit.”
CLICK HERE FOR MORE AT THE WALL STREET JOURNAL
