In a dramatic turn, Netflix’s market value plunged by over 35% last week following a disastrous Q1 earnings report that revealed a decrease of 200,000 in their number of subscribers, the first in over a decade for the world’s largest streamer.
While insiders were preparing for a slowdown, nobody expected an actual drop in subscribers. Even more troubling is that Netflix is projecting an additional loss of two million subscribers in the second quarter. Wall Street reacted to the news with a massive selloff of the company’s stock, which included substantial holdings from billionaire hedge fund investor William Ackerman.
Only three months ago, Ackerman had scooped up three million shares, saying that he felt that Netflix was an “attractive evaluation” after its stock had dropped in the wake of a less-than-stellar Q4 report. After an even more dire Q1 result, Ackerman decided to liquidate his holdings, commenting that, “we have lost confidence in our ability to predict the company’s future prospects.”
Many are predicting that Netflix’s current predicament is only the beginning for streamers, which had been flying high throughout the pandemic. This week, Disney, Warner Bros. Discovery, and Paramount all saw significant declines in their share prices as well. We may be emerging into a new phase of the market where streamers will have to reckon with the trifecta of huge investments, lack of profits, and intense competition.
Disney’s next quarterly report is due on May 11th and should provide some indication of the extent to which this struggle is unique to Netflix or applies to all the major streaming providers.
See also: Netflix Stock Price Drops 35%, Posting Biggest Fall Since 2004 (Wall Street Journal)