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Netflix Stock Down Over 50%, Losing Its Pandemic Gains

By Cristian Bustos. Originally published at ValueWalk.

Netflix

Shares of Netflix Inc (NASDAQ:NFLX) were down by 50% from $700.99, the streaming giant’s year-high recorded in November. The drop means the stock lost its gains accrued during the pandemic when consumers were locked down at home.

New Consumer Habits

As reported by CNBC, shares of Netflix dropped 2% to a new 52-week low of $332 each. The last time the stock sold at such value was on March 20, 2020, when governments implemented restrictions to counter the pandemic outbreak.

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When the toughest restrictions were lifted, consumers rushed outside looking for the type of entertainment they could not enjoy during lockdowns—restaurants, theaters, and outdoor activities.

Netflix anticipated the deceleration in new subscribers’ growth in its last earnings report, and said the phenomenon would continue in 2022. The effect would be a loss of $46 billion in market value.

As the stock tumbled 20%, the streaming giant increased the price of new subscriptions in both the U.S. and Canada —with the premium plan seeing the biggest increase.

Losing Ground

Michael Pachter, analyst at Wedbush, said, “There is nothing specific today, but the market appears to ‘blame’ Netflix’s slowing growth on competition.”

“That makes sense since we have a choice of conventional broadcast via cable or satellite, plus Hulu, Paramount+, Disney+, HBO Max, Amazon Prime, Peacock and Netflix among the premium services, plus a plethora of smaller choices like Discovery, AMC+, Shudder, and many others,” he added.

“I think wallet share makes it harder to retain customers, content dumps (all episodes at once) makes it easier for customers to churn, and competition to create content keeps the cost of new content going up.”

Despite Netflix’s successful releases such as “Stranger Things,” “Ozark,” “Bridgerton,” and “The Witcher,” the company has fallen short to compete in the field of established franchises —Marvel, DC, and Star Wars— in comparison to rivals Walt Disney Co (NYSE:DIS) and Warner Bros.

Netflix is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.

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