Netflix: the resounding stock market crash that made it lose millions (and what plans it has to avoid losing more users)

The actions of Netflix plummeted 35% after the company revealed a sharp drop in subscribers, warning that millions more are ready to leave the service.

The company lost more than $50 billion of its value in the market, since the experts indicated that it faces difficulties to return to normality.

Netflix faces intense competition from its rivals and was also affected after it raised prices and left Russia.

LOOK: Netflix: the reasons behind the platform’s first drop in subscribers in 10 years

However, some question his plans to boost the growthwhich includes a possible free service with advertising.

It also plans to crack down on password sharing, estimating that more than 100 million non-paying households enjoy the service in this way.

In a sign of concern, one of America’s best-known investors, William Ackmannabandoned his $1.1 billion investment in Netflix on Wednesday, taking a loss of more than $400 million.

His investment fund Pershing Square Capital Management had bought the Actions just three months ago.

LOOK: Netflix loses 200,000 customers in the first quarter and projects that 2 million more will leave this year

In a brief statement, Ackman said that while Netflix’s plans to change its business model made sense, investing in the company is too risky.

“While the Netflix business is fundamentally simple to understand, in light of recent events we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty“, wrote.

In a business update on Tuesday, Netflix indicated that its total number of subscribers had dropped by 200,000 during the first three months of 2022, its first loss in years.

Actress Olivia Colman stars in the final seasons of The Crown.

He also noted that some two million more are likely to leave the service in the next three monthsUntil July.

Some analysts have warned that, after a period of accelerated expansion during the pandemic, the streaming giant has run out of easy ways to grow.

Consumers are cutting back on streaming services to save money, while some feel there is too much content to choose from amid a rush of competition from rivals like Disney and Amazon.

“Netflix’s biggest problem, like the rest of the industry, is that consumers don’t have unlimited funds and that one or two subscriptions are usually enough,” said Michael Hewson, an analyst at CMC Markets.

LOOK: Netflix would launch cheaper plans with advertising on the platform

“And while Netflix remains the market leader, it doesn’t have the deeper pockets than Apple, Amazon or Disney, making it much more vulnerable to a margin squeeze.”

But Julian Aquilina, a television analyst at media research firm Enders Analysis, said it’s a mistake to write the firm off.

“The broadcast market is maturing and the high expectations people had for Netflix are changing,” he said.

“I think it will continue to be the market leader, it has a very dominant position. If people are going to get rid of a subscription, Netflix will not be the first thing they choose.”

He added that the firm had just raised its prices, “which always leads to a drop in subscribersbut it also means you’re generating more revenue per customer.”

Netflix pulled out of Russia in response to the war with Ukraine.

Netflix remains the world’s leading streaming service with over 220 million subscribers. It is increasingly producing its own content and shows like The Crown, Bridgerton and Squid Game have been global hits.

The company had enjoyed uninterrupted quarterly subscriber growth since October 2011, but admitted on Tuesday that it was losing customers to rivals.

The company also reported that the decision to raise prices in key markets cost it 600,000 subscribers in North America alone, while its departure from Russia over the Ukraine war caused it to lose 700,000.

Despite the challengesrevenue grew US$7.8 billion in the first three months of the year, 9.8% more than in the same period last year.

That marked a slowdown from previous quarters, while Profits they fell more than 6%, to about $1.6 billion.

Netflix shares continued to fall this Thursday.

Source: Elcomercio