Netflix sheds more than $50 billion in market cap as stock plunges on subscriber loss

Shares of Netflix plunged 36% Wednesday after the streamer reported earnings Tuesday night that confirmed it lost subscribers for the critical time in more than 10 years. The outcomes and frail outlook led to a wave of downgrades from Wall Boulevard on fears over the firm’s prolonged-term boost doable.

The fall prompted Netflix to shave more than $56 billion off its market cap.

Netflix stated diverse headwinds are affecting boost, at the side of rising competition and the lifting of pandemic restrictions. The video streamer’s industry benefited from coronavirus stop-at-residence orders, with more of us wanting for out digital leisure. Nonetheless in unique months of us were spending much less time on digital platforms as vaccines rolled out and mandates eased.

Slower household broadband boost additionally performed a job in the firm’s frail forecast. Netflix estimated that 100 million households are sharing their subscription passwords with other household or traffic. 

The firm, in a effort to broaden boost, stated it is pondering a lower-priced ad-supported tier and urged a crackdown on password sharing is coming. And while analysts regarded normally upbeat about these changes, they famed that it wasn’t a transient resolution to the subscriber defective thunder. 

“Even though their plans to reaccelerate boost (limiting password sharing and an ad mannequin) get merit, by their very contain admission they might maybe well perchance not get noticeable affect till ’24, an extraordinarily prolonged time to wait on what is now a ‘clarify me legend,'” Bank of The United States analysts stated in a Wednesday clarify. The agency was once one in all as a minimum nine companies to downgrade Netflix on the disappointing report. 

“After what can only be called a unsightly 1Q subscriber proceed out and frail subscriber & monetary steering we diminished our subscriber forecasts and pushed back our profitability forecasts seriously,” Pivotal analyst Jeffrey Wlodarczak wrote in a Tuesday clarify. The agency downgraded the stock to promote from bewitch.

Wells Fargo analysts wrote in a Wednesday clarify that downgraded the stock to equal weight that “negative sub boost and investments to reaccelerate revenues are the nail in the NFLX account coffin, in our ogle.”

Several streaming companies and products’ stocks took a dive Wednesday morning along with Netflix as investors anticipate updates on their boost. Shares of Disney were down about 5% after markets opened on Wednesday. Similarly, shares of Roku were off more than 7%, Paramount stock slumped 12% and Warner Bros. Discovery slipped by about 5%.

“Putrid adds exercise remains to be softer than anticipated, as such, subscription companies might maybe well well perchance ogle identical pressures real thru this earnings season, despite the indisputable truth that we clarify NFLX is unusual in that it is method more penetrated, notably when accounting for password sharing,” Wolfe Be taught stated in a Tuesday clarify. The agency maintained its outperform score.

—CNBC’s Michael Bloom contributed to this report.