Netflix just lost a ton of money after failing to hit subscriber goals
The company's stock price dropped more than 20 percent in 24 hours after it failed to secure the full 3 percent of the human population it was aiming for
When we talk about Netflix and the streaming business, it’s usually with the assumption that the California-based company remains the king of that particular digital hill. After all, Netflix, as the first big streamer, has a massive lead on all of its competitors, plus planetary name recognition, and the kind of install base that ensures stability for the next several years of content generation.
Except that modern capitalism isn’t built on stability—it’s built on growth. Endless, explosive, inescapable growth, of the sort that continually gooses a company’s stock price upwards into Big Finance Guy Heaven. And it turns out that it’s pretty damn hard to grow when you’re already the biggest kid on the block.
Hence news this weekend that Netflix’s stock price has just suffered a massive drop (from $508 a share to less than $400, knocking some $50 billion off its total market cap) after news that it just barely missed its subscriber growth numbers for the most recent quarter. Specifically, the company had set a goal for itself of 221 million global subscribers—a scant 3 or so percent of the total planetary population—by the end of 2021, and says it failed to hit it.
The stock price drop is the fastest drop that Netflix has seen in roughly a decade, and is especially notable in light of the company’s recent plans to once again raise prices, making it the most expensive of the mainstream streamers by a comfortable margin. (That price raise, in turn, has been viewed by many as an effort to keep corporate profits growing even as subscriber growth trails off.)
The company’s stock woes weren’t helped by the fact that it’s also tempering expectations for future profits: In the same earnings call, the company revealed that it’s only shooting for 2.5 million new subscribers in the coming quarter, down from the 4 million it was aiming at this time last year.
The Wrap also quotes a letter to the company’s shareholders, which revealed the shocking, if not exactly surprising, news that its growth in the U.S. and Canada has basically slowed to nil. Ninety percent of the company’s new revenue new comes from international markets.