Netflix wiped out $ 24 billion in market capitalization in just six days, following a dramatic slowdown in subscriber growth.
Shares of Netflix shares have fallen 15 percent since the company made a profit last Wednesday, with a market capitalization of the company to $ 135 billion after the market closed on Tuesday.
The dramatic slowdown in global growth at Netflix – including the first quarterly decline in the number of US subscribers since 2011 – raises questions about how many people are willing to pay for streaming services. Especially with a large number of new ones from Disney, Apple and others on the road.
A recent price increase seems to have scared Netflix subscribers. The company lost 126,000 subscribers in the US, less than 1 percent of the 60.1 million paid US subscriptions, during the April-June period.
A five-day display of Netflix shares shows a sharp drop after last Wednesday's earnings report
The most popular plan rose from $ 11 to $ 13 in a US price increase announced in January and rolled out for many subscribers during the second quarter.
The service attracted 2.7 million subscribers worldwide, far below Netflix's forecast of 5 million.
& # 39; Netflix prizes have prompted people to consider whether they were getting value for money, & # 39; said Wedbush analyst Michael Pachter.
Although people are willing to pay for multiple services to meet their streaming needs, he said, they are also willing to cancel if they don't use it enough, just like a gym membership or a subscription to the New Yorker magazine.
Streaming services that are preparing to compete with Netflix seem to be taking into account.
Disney Plus, which debuts in November, is already cheaper than Netflix for $ 8 a month, although Disney Plus also has a smaller video library.
Hulu has lowered prices to $ 6 from $ 8 for its most important, ad-supported service. Apple services coming out this year, and WarnerMedia and NBCUniversal in 2020, have not yet announced prices, although the NBCUniversal service will be free and ad-supported for traditional cable TV subscribers.
Netflix hopes that the release of the third season of Stranger Things (above) will help increase the number of subscribers for the July-September reporting period
Even if these individual services are cheaper than Netflix, it is of course not clear how many consumers are willing to pay.
One way to make a service attractive is not through better prices, but through exclusive shows and deep libraries, including shows that Netflix will lose.
The two most popular shows from Netflix, & # 39; Friends & # 39; and & # 39; The Office & # 39 ;, are leaving for rival services in the coming months.
Group M analyst Brian Weiser said that other services should not be too concerned about a weak quarter or two at Netflix.
He said that streaming content consumption is still growing rapidly, so the overall market has enough room for competitors. And the streaming arena is a growing area in the much larger and more mature entertainment industry.
& # 39; I don't think it follows that if Netflix has a poorly performing quarter that tells you about others, & # 39; he said.
Some analysts also believe that Netflix's problems are temporary.
Canaccord Genuity analyst Michael Graham said the number of subscribers is likely to hit the stock in the short term – the share fell by 11 percent in afternoon trading Thursday – but overall the company's growth remains on track, especially abroad .
& # 39; We still see a strong content strategy and room to add large numbers of international subscriptions as important strengths for the future &, he wrote in a note to investors.
Similarly, Pivotal Research Group analyst Jeffrey Wlodarczak said that investors are not a & # 39; mountain of a molehill & # 39; with the most recent quarterly figures.
The spring quarter is usually slow for the streaming service and Netflix acknowledged that a weak content slate was partly the cause of the decline.
It expects to get some speed again this summer and expects to add 7 million subscribers from July to September.
The optimism stems in part from the immense popularity of & # 39; Stranger Things & # 39 ;, whose third season attracted a record number of visitors after the release on July 4.
Netflix has said it welcomes the competition. It ended in June with 151.6 million subscribers worldwide, much more than a stream of video streaming rivals including Amazon and Hulu.
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