Why Netflix's Stock Dropped 41% in Two Months
"Netflix's stock has tumbled 41% from the all-time high it hit just two months ago," reports CNN Business. "It's gaining subscribers at a painfully slow pace. Competition is heating up. The company's answer to all that: It just raised prices on North American customers."Netflix ended 2021 with 221.8 million subscribers. That's significantly more than others in the streaming marketplace, including Disney, one of its closest competitors. Disney had 118.1 million subscribers as of October, and it grew subscriptions 60% between October 2020 and October 2021. During that same period, Netflix grew just 9%. Disney hasn't yet reported its financial results for the last three months of 2021. But Netflix's growth slowed even further in the fourth quarter to just 8%. (And Disney's growth last quarter spooked Wall Street too....) The problem with relying exclusively on subscriptions for revenue is: after a while, you run out of people who haven't subscribed. That's bad news for Wall Street investors who are mostly concerned with companies' abilities to grow. Zak Shaikh, vice president of programming at research-based media firm Magid, believes that Netflix's fall is more of "a Wall Street thing" rather than "something that reflects the business is in trouble.... They still added subs, and they still have the same high usage and viewing metrics," he added. However, even Shaikh pointed out that in the long term, "Netflix will have to deal with the fact that you can't keep adding subscribers." One way the company has tried to offset its slowing growth is by investing in other verticals, such as gaming. Another way is to raise prices, but that could prove difficult as fierce competition ramps up. Although price increases will probably help to offset its sluggish sign ups, they could also lead to more stagnation for Netflix. For some consumers, price increases - even small ones - are a lot to ask considering that so many competitors are at Netflix's gates. Michael Nathanson, a media analyst at MoffettNathanson, specifically predicted to CNN Business that 2022 will be a year "of concern about growth and competition for Netflix."
Read more of this story at Slashdot.