Netflix deals with massive stock price drop

While the US stock market is actually on a four day upward streak this week, the same cannot be said for Netflix's stock price. The streaming video and DVD mail order company took a massive 19 percent stock drop in trading on Thursday. CNN reports that in mid July Netflix's stock price was just over $300 a share. Today its stock price is down to just $169 a share.

The big stock price drop on Thursday was due to Netflix admitting that it would lose a total of 1 million of its subscribers in its current quarter. Last July, the company announced that its customers who use both the streaming video feature and the DVD mail order service would see their monthly prices go up by 60 percent. That action caused many of Netflix's subscribers to express their displeasure via Twitter, Facebook and message boards. At the time financial analysts were unfazed by the news. That's not the case anymore.

Netflix received another large bit of bad news earlier this month when the pay cable TV service Starz announced that it would not renew its current deal with Netflix to provide streaming video versions of its library of movies and television shows. Anthony DiClemente, an Internet and media analyst at Barclays Capital, says, "There may be a renewed sense of urgency for Netflix to go out to acquire film and TV content to replace Starz." The big question is whether this loss of subscribers is just a blip or if it is a sign of things to come for Netflix's customer base.

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Holy crap, talk about taking a pounding! If I had the money i'd say this is probably a good time to buy some stocks.

Watch people panic and sell - stock prices go down.
Buy up a ton of them stocks
Tell all my friends to sign up for Netflix
Profit??!!

That is what happens when customers get fed up with overpaying for service. This time the customers are giving these companies their a** to kiss. Hopefully Comcast, At&t, Bank Of America, Wells Fargo, Marta Transportation and a whole host of companies will be next. The American people are tired of being ripped off. We are tired of paying more and getting way less service. Then you blame it on the economy, when it is really greed and trying to remain 1st place in being rich.

Mathachew said,
From $300 to $169 is no mere 19%, that's 43.6%!

It dropped 19% yesterday. The total of 43.6% is since July.
It looks to be down another 8% (as of right now), so the loss just keeps growing.

Astra.Xtreme said,

It dropped 19% yesterday. The total of 43.6% is since July.
It looks to be down another 8% (as of right now), so the loss just keeps growing.

Yeah, there was that little detail about "Thursday" that I overlooked...

I like how you can't even browse the DVD lists anymore so you can tell what is DVD only other than getting a nice big page "you don't have DVDs anymore, f off or buy the subscription"

Yeah, that's poorly implemented. Kinda reminds me of how netflix on my wii never wanted to give me information about the dvd only titles....only that they were dvd only.

To me, this is a case of the content providers(studios) screwing Netflix over. They don't just view Netflix as a customer, but a competitor. The studios increasingly have their own content-delivery systems and want to put Netflix out of business. All you suckers saying Netflix screwed you are getting screwed over by the studios(Dish Network) 10x over.

KingCrimson said,
To me, this is a case of the content providers(studios) screwing Netflix over. They don't just view Netflix as a customer, but a competitor. The studios increasingly have their own content-delivery systems and want to put Netflix out of business. All you suckers saying Netflix screwed you are getting screwed over by the studios(Dish Network) 10x over.

I was reading an article on Film School Rejects the other day actually that summed it up pretty nicely. The content producers notice a drop in DVD sales, so they jack up the price for sites like Netflix to make it up / drive people back to DVD's, where they make more money.

It's a pretty messed up situation. :\

KingCrimson said,
To me, this is a case of the content providers(studios) screwing Netflix over. They don't just view Netflix as a customer, but a competitor. The studios increasingly have their own content-delivery systems and want to put Netflix out of business. All you suckers saying Netflix screwed you are getting screwed over by the studios(Dish Network) 10x over.


True and this kind of bothers me if some people even bother reading the article or all they care about how Netflix raised the price and do not want to be bothered with the reason behind it. Look at how much Starz wanted from Netflix so they can continue streaming all Starz (Sony/Disney) movies and shows.

I dumped them, the streaming selection sucked and the DVD side of things wasn't too worth it for me especially with all the new deals and regulations Big Studio is putting into play ontop of starz pulling their lineup.

Count me in as one of their million lost subscribers. 1 dvd + streaming increased 60% but and all I'm getting is missing Starz content. At $10 I would have subscribed forever but at a certain point it's easier and cheaper for me to just pay the $5 pay per view on directv and hit my local Redbox as I'm only watching two or thee movies a month. My guess is that I'm not the only one that sees it this way. Too damn bad because I really liked them!

Only thing Netflix offers is old and outdated movies. the new releases they get are of the bottom of the barrel and already too late before it gets to them. I am thinking about dropping my streaming only subscription and saving 8 bux a month.

Normally this is where I would invest in a company, when the stock plummets to rock bottom. But in Netflix's case, I think their stock is far from rock bottom and will keep getting worse.

All they've essentially done is take away a big library of movies and then charge a higher price for it. This company is going to fold up in a hurry if they don't start caring for their customers.

from the CNN article:

"One analyst predicts that Netfllix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012."

I'd like to see what all you Einsteins would do if you were running Netflix. I tell you, people need to actually, oh you know, understand the entire context of a story before coming to a conclusion.

Oh yeah, it's funny how people say they're going to start using Redbox. Unless you are in walking distance to a kiosk, you do realize that gas costs money, right? Do you take that into account?

Edited by COKid, Sep 16 2011, 3:33pm :

COKid said,
from the CNN article:

"One analyst predicts that Netfllix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012."

I'd like to see what all you Einsteins would do if you were running Netflix. I tell you, people need to actually, oh you know, understand the entire context of a story before coming to a conclusion.

Oh yeah, it's funny how people say they're going to start using Redbox. Unless you are in walking distance to a kiosk, you do realize that gas costs money, right? Do you take that into account?

Yah but Netflix doesn't deliver you soda and popcorn.....

On another note they need to set up better contracts with the various networks and allow streaming of all the movies they have. But that would be a perfect world.

COKid said,
from the CNN article:

"One analyst predicts that Netfllix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012."

I'd like to see what all you Einsteins would do if you were running Netflix. I tell you, people need to actually, oh you know, understand the entire context of a story before coming to a conclusion.

Oh yeah, it's funny how people say they're going to start using Redbox. Unless you are in walking distance to a kiosk, you do realize that gas costs money, right? Do you take that into account?

"Predicts"... Enough said...

If their costs have, as of right now, risen, then they need to explain that to customers, some of which will probably understand. But no, all they have done is take away and raise the price. It's a very fair conclusion to make from our standpoint...

COKid said,
from the CNN article:

"One analyst predicts that Netfllix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012."

I'd like to see what all you Einsteins would do if you were running Netflix. I tell you, people need to actually, oh you know, understand the entire context of a story before coming to a conclusion.

Oh yeah, it's funny how people say they're going to start using Redbox. Unless you are in walking distance to a kiosk, you do realize that gas costs money, right? Do you take that into account?

What licensing costs, the costs of all the companies pulling their shows/movies from Netflix? Can't blame licensing costs when you can't even keep your licensing deals going.

AJerman said,

What licensing costs, the costs of all the companies pulling their shows/movies from Netflix? Can't blame licensing costs when you can't even keep your licensing deals going.

To be fair, that's not necessarily Netflix's fault. Most of them want to pull and stream on their own to get 100% profit from it rather than a cut.

$8 isn't a bad price for streaming, the problem is they did this change BEFORE they upgraded their streaming content. I liked getting blu rays for new releases...what they should have done is made sure they were able to stream new releases.

kevinadam said,
And this is what they get for screwing their customers over. I hope it gets even worse

Now, if it only worked like that for phone, cable, insurance, etc., what a better place the world would be.

kevinadam said,
And this is what they get for screwing their customers over. I hope it gets even worse

And how were they screwing their customers over? They were already ridiculously undercharging, and the cost of licensing has gone up. Yes they had a PR disaster, but the real reasons behind the increases were 100% sound.

I'd be willing to pay more for streaming if 90% of my searches didn't result in 'DVD Only'. It's still generally useful for watching TV show reruns, but for movies it's very hit-or-miss. Mostly 'miss'.

chadlachlanross said,
I'd be willing to pay more for streaming if 90% of my searches didn't result in 'DVD Only'. It's still generally useful for watching TV show reruns, but for movies it's very hit-or-miss. Mostly 'miss'.

Exactly... half the titles for example Lord of the Rings 2 and 3 are Disk only yet you can stream the first one??! WTF!? I've been waiting on a disk rental of one movie for over a year but nobody has yet to put it on DVD but i can't blame netflix for that

With a price hike, stricter usage rules being enforced, and a terrible selection of content for "instant access" I'm not surprised that Netflix is losing customers and stock.

FMH said,
Thank God I don't own their stocks!

(On a side note, I don't own ANY stocks )

you should get some stocks coming from a financial advisor.. get some stocks in microsoft or any of the huge companies that give out a dividend because they have less volatility..

Lachlan said,

you should get some stocks coming from a financial advisor.. get some stocks in microsoft or any of the huge companies that give out a dividend because they have less volatility..

MSFT ftw!

Some loss was expected considering the price increase, but $8 per month still isn't much for unlimited streaming. Unfortunately though, the streaming library is somewhat limited.

Gotta love corporate bureaucracy getting in the way of legitimate venues to acquire digital media.. They're not exactly making it hard for people to justify piracy.

Caleo said,
Some loss was expected considering the price increase, but $8 per month still isn't much for unlimited streaming. Unfortunately though, the streaming library is somewhat limited.

Gotta love corporate bureaucracy getting in the way of legitimate venues to acquire digital media.. They're not exactly making it hard for people to justify piracy.

The amount of movies will drop even more for streaming since a BIG chunk of them were provided by starz.

The streaming library does suck, which means if you want to be able to watch all the shows you want, you need the DVD subscription as well, however, a price increase of 60% is ridiculous. A small bump in pricing, even if it's followed by another small bump in another 6 months or a year or so would have kept a lot more subscribers happy. It tells me that either A, Netflix is trying to make a massive profit by raising prices 60%, or B, they didn't plan well prior to this causing them to jack the prices up to stay alive.

I've read their financial statements, and they are still pulling in a ton of money. I know new contracts are being signed and are going to cost more, but this is exactly the kind of news they can't afford. You can't raise prices 60% and blame increasing license costs, then fail to renew licenses like Starz. Netflix is on a downward spiral, and I expect a far superior streaming service will appear soon that will send it to it's grave. Leave DVDs to Redbox, just get a decent streaming library.

AJerman said,
You can't raise prices 60% and blame increasing license costs, then fail to renew licenses like Starz.

The license renewal has little to do with Netflix, and everything to do with Starz. You can't really blame Netflix if companies like Starz go "Yeah...so...I'm not going to play in your sandbox anymore, I'm gonna go make my own.". Companies like Starz are going to kill companies like Netflix. Everyone wants to pull in their own money individually, and not share with anyone else. Although I understand that greed, it's killing certain areas of technology that could prosper if they would just learn to share, even if it is for a fee.