Netflix Shares Take Another Beating Friday
Since disclosing that a recent price hike has cost it about 1 million subscribers, the stock is off 26 percent.
After the closing bell Friday, stock indexes had scored one of their biggest weekly gains in the past couple of years, but Netflix had one of its worst weeks in its history, plunging 26 percent, with most of the drop occurring Thursday and Friday.
The catalyst was the company saying that it should end the quarter with 24 million subscribers, about a million shy of what the company had previously predicted. Customers, it seems, aren’t as accepting of a recent price hike as Netflix had expected them to be.
Netflix also has fairly new competition in the subscription-streaming business from Amazon.com and soon from Blockbuster and perhaps Redbox. Plus, the price of acquiring TV shows and movies to stream has increased dramatically, and Netflix hasn’t been able to renew a deal with Starz, a primary supplier of Netflix content.
That kind of uncertainty has knocked the stuffing out of Netflix stock, which is now trading down on the year despite posting hefty gains for the first eight months of 2011.
Netflix shares sunk 8 percent Thursday to $155.19 after sinking 19 percent the day prior. The shares have been nearly cut in half since touching $300 a few months ago.