Netflix has lost $24 billion in value in six days. The company lost $17 billion in value on Thursday, the day after its July 17th quarterly report. The report showed that the total number of subscribers to the ubiquitous streaming had declined for the first time. The report also revealed that the company had added 2.7 million subscribers worldwide where it had projected to add 5 million. But the company’s stock began dropping before the report was made public, with shares dropping in value every day for the past nine days. Its value has dropped by 15 percent thus far, according to The Hollywood Reporter. It closed on Tuesday down $3.32 to $307.30. That gives it a market cap of $134.5 billion.
Netflix has been a solid gainer for investors. Its value has increased by 3,300% in less than nine years. Analysts have been skeptical of its ability to continue that trend. One problem is there being fewer potential new subscribers to capitalize on, making Netflix a victim of its own success.
Another is that Netflix is facing increased competition. There's its chief rivals, Hulu and Amazon Prime Video. Propriety services like CBS All Access and DC Universe have also entered the market. Disney+, HBO Max, and an NBCUniversal platform are set to join them soon. Those services' parent companies are also taking their content back from Netflix. As such, Netflix has had to increase spending on original content to compete.
With that forecast in mind, some longtime investors saw this quarter’s stumble as a sign that it was time to cash out on their gains. Some experts expect Netflix’s stock to rebound as this initial investor exodus tapers off, climbing back to a value of around $380 in 2020. That would still be a significant decrease from the company’s pre-report value.
Netflix raised its domestic prices by 13-18 percent in January. Most assume that price increase led to the user exile seen in the quarterly report. Amazon offers its Prime Video streaming service bundled with its other Amazon Prime benefits. Disney+ set to launch with a $7 per month fee, about half of the cost of Netflix. As a result, Netflix’s image has shifted from the cheap alternative to cable to the most expensive streaming option around. Some analysts suggest this may be a good time for Netflix to take a page from Hulu and CBS All Access by offering a cheap, ad-supported subscription tier.
What do you think of Netflix’s stock troubles? Let us know in the comments.
Disclosure: ComicBook is owned by CBS Interactive, a division of ViacomCBS.