The streaming giant, whose stock had already dropped more than 40% year-to-date, blamed the attrition on increased competition for viewers and Russia's invasion of Ukraine. Netflix said its decision to pull out of Russia cost the company 700,000 subscribers. But the economy isn't helping, either.
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Why you should buy Netflix stock?
It’s not hard to see why – during ... Alphabet over Netflix. I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner. But since our US analyst team first recommended shares in this unique tech stock back in 2016 ...
Why Netflix stock is so volatile?
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Should you buy Netflix stock right now?
Netflix, Inc. (NASDAQ: NFLX) was one of the disappointments of the Big Tech reporting season. An analyst at Needham has cautioned that more downside could be ahead. The Needham Analyst: Laura Martin has an Underperform rating on Netflix shares. The Netflix ...
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Why did Netflix stock collapse?
Key Facts. Shares of Netflix plummeted over 35% on Wednesday morning after the company reported that it lost subscribers last quarter—for the first time in over a decade, which it blamed on password sharing and increased competition from rival streaming services.
Why did Netflix stock drop 2020?
UPDATED: Netflix shares plummeted to their lowest point since January 2018 as investors reacted to the streamer's first subscriber loss in more than a decade — bringing years of booming growth to a screeching halt.
Why did Netflix drop 30%?
The issue. The streaming giant blamed the drop in subscribers on one-off factors, such as pandemic lockdowns easing, higher subscription fees, password sharing and pulled services in Russia.
What happened
Shares of Netflix ( NFLX -1.33% ) -- among the hottest performers on the Nasdaq, with an 87% gain over the past 52 weeks -- are giving back some of those profits today. As of 1:30 p.m. EDT, Netflix shares are down 5%.
So what
We can rule out all of the usual suspects. Netflix didn't report any disappointing earnings news today. It didn't warn of bad news to come or make any noises about subscriber growth slowing down. No analysts downgraded Netflix stock -- or even cut their price targets.
NASDAQ: NFLX
Rather, Netflix shares appear to have been caught up in a stock market rout that has the Nasdaq as a whole trading down nearly 2% today (and the Dow trading down more than 1%). Perversely, analysts blame a strong economy for this, because a strong economy pushes bond prices up -- making "risky" stocks relatively less attractive than "safer" bonds.
Now what
And let's get real here: There aren't a lot of stocks as obviously "risky" as Netflix, with its 150-plus price-to-earnings ratio and its total lack of free cash flow.
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The company released a strong earnings report
Netflix ( NFLX 6.14% ) shares fell steadily in October, even though the company reported strong earnings and subscriber growth. It's hard to blame the drop on any specific metric, though shareholders may be concerned over the company's continued high levels of spending.
What happened
The streaming giant saw revenue climb from $2.9 billion in the third quarter of 2017 to just under $4 billion in the same period this year. It also added roughly 6 million subscribers during the period. The only negative you can really take from the numbers is that penetration in the United States appears to be near its peak.
So what
Netflix did see its free cash flow move in the wrong direction in Q3. CEO Reed Hastings explained what happened in his letter to shareholders.
Now what
Hastings isn't playing a short-term game. Netflix is spending heavily to build the biggest possible base of users around the world. Original content will cause cash flow deficits. At some point, however, the company will move from content growth mode to content maintenance mode, where it builds on its archive instead of having to build one.
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