Netflix Loses $50B in Value Overnight

Netflix is having a doozy of a week. Hours after revealing it reported a net loss in subscribers for the first time in a decade, stocks of the streaming platform went tumbling. So much so, Netflix ended up losing over $54 billion in market capitalization overnight — one of the biggest single-day plummets in the history of the market. The stock ($NFLX) sank throughout the day on Wednesday, losing some 35 points to close at $226.19 per share.

“I know it’s disappointing for investors, and it is for sure,” Netflix CEO Reed Hastings said on the company’s Q1 earnings call. “But internally, we’re really geared up, and this is like our moment to shine. This is when it all matters. And we’re super focused on achieving those objectives and getting back into our investors’ good graces.”

Tuesday, Netflix suggested password sharing is one of the major pitfalls holding the company back at this stage.

“This is a big opportunity as these households are already watching Netflix and enjoying our service,” the streamer wrote in its letter to shareholders on Tuesday. “Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we’ve always tried to make sharing within a member’s household easy, with features like profiles and multiple streams. While these have been very popular, they’ve created confusion about when and how Netflix can be shared with other households.”

The streamer had unveiled in 2021 that it intended to develop technology that would charge accounts more if they were found to be sharing passwords between multiple households.

“We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans,” Chengyi Long, director of product innovation at Netflix, wrote in a blog post about the experiment. “While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households — impacting our ability to invest in great new TV and films for our members.”

The blog post added, “We recognize that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films. We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world.”