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Netflix shares fall to lowest since April 2020 on subscriber concern

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Scene from Netflix’s “Squid Game”.

Netflix

NetflixHe has transformed from being a “Squid Game” host to a participant in the show.

At mid-day on Monday, streaming company stock fell 6.6% and reached as low as $371.37. The following is the result Friday’s 22% plungeThis was the highest one-day drop in July 2012, at a staggering.

Netflix shares have fallen 47% since November’s record intraday high. They are also trading at their lowest level since April 2020 when Covid-19 was still in the early stages of the U.S. economic shutdown. This sudden drop is almost unbelievable for Netflix investors.

Netflix’s business boomed in 2018 and much of the year, as Netflix users were still stuck in quarantines. The company added more than 36 million subscribers in 2020 and 18.2 million in 2021.

On Nov. 19, the stock broke $700, a record two months after Netflix was released. “Squid Game,”This South Korean television series was the most successful. It follows fictional contestants who compete in children’s games to win money and pay back their debts. Losing a game results in contestants being killed.

Netflix’s unexpected success with “Squid Game”, however, has not been able help it to avoid a stock market crash.

Netflix further scared the market by last week’s announcement that investors were already leaving the major stay-at home winners. fourth-quarter earnings report. StreetAccount estimates show that the company will add 2.5 million customers in its first quarter. That’s far lower than analysts predicted.

Concerns about the media industry

Netflix may be not the only one limiting its growth.

Every major media company has reorganized their business in the last two years to take advantage of Netflix’s growing value. Disney, AT&T‘s WarnerMedia, Comcast’s NBCUniversal ViacomCBSTheir shift to streaming has been accelerated overhauling their internal business structuresAs part of a landgrab, cord cutters were also included.

The pandemic didn’t change the shift to streaming — it just hastened it. Each year, millions of Americans turn off traditional TV. Any media company should focus on a streaming service that consumers can access whenever and wherever they like. Netflix was the industry’s first to acknowledge that there is competition. eating into its growth.

Netflix’s loss can be seen as its gain by competitors, but Michael Nathanson, MoffettNathanson’s research analyst, has a dimmer perspective.

Nathanson wrote that the quarter of Netflix was “a worrying data point” for all streaming companies. He sent a note after the report to his clients. The sell-off of Netflix equity has made it harder for us to use the stock as a bullish comp within the media industry.

So, Netflix’s current value is $350/share. Should investors in Discovery, ViacomCBS, and Disney also revalue these companies? This is what seems to be happening. Since Netflix’s fourth-quarter earnings were announced, Disney shares fell 11% while ViacomCBS shares dropped over 8%.

Investment firm Jefferies downgraded Netflix on MondayReed suggested to the company that it shift its focus from streaming video to games in order to provide a new growth story for shareholders. Reed Hastings, co-CEO and Netflix founder, stated on the earnings conference that Netflix should be a global company. a world leader in gaming.

This sounds extreme?Stranger Things“It has happened.

Disclosure: CNBC is owned by NBCUniversal.

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