Netflix's Stock and Subscriber Drops: What the Media Is Saying

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Reed Hastings

The company has "lost the goodwill" of both customers and investors, writes two Wall Street Journal reporters, while a writer wonders whether CEO Reed Hastings' job is in jeopardy.

Monday wasn't a good day for Netflix executives.

The company revealed that it lost 800,000 U.S. subscribers in the third quarter, about 210,000 more than the company had projected, and the stock was off $32 in after-hours trading as a result.

If after-hours action is to be believed, Netflix shares could open in $85-range Tuesday morning, which would represent a fall of 72 percent in three months time.

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During a conference call with analysts Monday, CEO Reed Hastings said the company lost more subscribers than anticipated because "a second wave of cancellations" occurred in September and October once consumers got a look at the price increase that was announced in July, which was when the first wave of cancellations took place.

Of the ill-advised Qwikster, an aborted plan to spin off its DVD-by-mail service that upset customers, Hastings said: "In hindsight, it's hard to justify."

The news set the media world abuzz with speculation about what this means for the future of the company.

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"Today’s earnings report was Netflix’s first step on the road to redemption," wrote the Wall Street Journal's Mark Gongloff. "Instead, it stumbled."

His WSJ colleagues Stu Woo and Ian Sherr noted that Netflix "infuriated subscribers" with the price increases and the Qwikster idea.

"Netflix Inc., which once could do little wrong in the eyes of customers and investors, has lost the goodwill of both," they wrote.'s Todd Wasserman speculated that Hastings' job might be in jeopardy.

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"The company’s plummeting stock price is likely to increase calls for CEO Reed Hastings' dismissal," he wrote, noting that Hastings told the New York Times Magazine in an interview that ran over the weekend that he was not considering stepping down.

Meanwhile, Matthew Jarzemsky of Dow Jones Newswires called the company's earnings and revenue guidance "grim."

And editor Jeff Reeves wrote that Netflix executives have their work cut out for them in terms of winning back customer appreciation.

"The writing is on the wall," he wrote. "Netflix said loud and clear that it didn’t care about its customers and has a lot of work to do if it wants their trust bank. This comes at the worst possible time, as the competition is heating up for NFLX. Hulu is considering an IPO, and Facebook are going heavy with streaming video."

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Meanwhile, CNET's Greg Sandoval speculated that Netflix, which has been "one of the great Internet success stories" for most of the past two years, is now "in jeopardy of becoming a cautionary tale of hubris and collapse."

Of Hastings' comment that Netflix has a slew of quality content, including complete seasons of Mad Men and Breaking Bad, that should satisfy customers, Sandoval wrote: "But the question is, will this kind of content be enough to bring his former subscribers back and keep Netflix growing? The next couple of quarters should give us our answer."

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