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The Horrific Plunge of Netflix Stocks, Explained

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Netflix plunged 36% at the opening of Wall Street on Wednesday after announcing worse-than-expected quarterly results the day before, with a cut in its subscriber base and stagnant profits.

Half an hour after trading began on the stock exchange, Netflix shares, which are listed on the Nasdaq index along with the big technology companies, dropped 35.93% of their value, cutting some 125.26 dollars to stand at 223.35 dollars per share.

Netflix lost 200,000 subscribers between January and March 2022, its first cut in more than a decade and a figure in stark contrast to its expectations of adding 2.5 million, which its executives blamed on increased competition among streaming companies.

The platform reported slightly lower profits than in the first quarter of the previous year, of 1,597 million dollars, and pointed to factors such as inflation.

The company, which has 221.64 million subscribers to its service worldwide, anticipated losing another 2 million subscribers in the next quarter and said it is considering offering a subscription model with ads for a lower price, something it has resisted.

According to Wall Street analysts, this could be the worst trading day for Netflix in more than a decade and the end of its pandemic bonanza, as its business took off during the covid-19 confinements, but that outlook is “clouding over” with the return to normalcy.

Netflix’s fall in the stock market this morning dragged down other subscription-based digital entertainment companies, such as Disney (-4.6%) and Amazon (-2.33%), which also offer television content, or Spotify (-8%), which offers music services.

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