Tuesday, October 20, 2020

NETFLIX SHARES PLUNGE

July 25, 2012 by · Leave a Comment 

Shares of Netflix were down 25 percent on the Nasdaq near the close of trading today (Wednesday) following the company’s after-hours report on Tuesday that its net income for the second quarter was down 91 percent from the same quarter a year ago. The company said that it added 530,000 subscribers to its streaming service in the quarter while losing 850,000 subscribers to its DVD-by-mail service. It noted, however, that 73 percent of its disc subscribers are also paying for the streaming service, i.e., a monthly fee of $15.98 versus $7.99 for streaming alone. Today’s plunge in the company’s stock that virtually erased all the gains Netflix has made since the Qwikster debacle last September, also came as BTIG analyst Richard Greenfield, in an open letter to the company’s management, asked a number of pointed questions about the company’s strategy that appeared to reflect growing concern that it is sailing rudderless into uncharted territory. Greenfield asked about complaints that extended wait times for Netflix DVDs, especially for HBO titles. Has Netflix reduced its DVD inventory? Why has Netflix’s plan to distribute original programming slipped from late 2012 to 2013? More pointedly, Greenfield asks, “What are your release plans for original programming? While consumers would clearly love you to follow the all-at-once strategy to enable binge viewing that strategy appears far from ideal vis-a-vis churn, as connecting/disconnecting Netflix is so easy. How do you balance the two dynamics?” Thus far, Netflix has not responded to Greenfield’s questions.