By Lucas Nolan Streaming giant Netflix suffered a $50 billion slash off its market cap Wednesday after its shares closed down 35 percent upon news that the company had lost over 200,000 subscribers with expectations to lose more in the future.
CNCB reports that Netflix shares closed down more than 35 percent on Wednesday after the streaming giant’s earnings report on Tuesday that showed it had lost subscribers for the first time in ten years — and expected to lose more. The company warned shareholders that it was likely to lose another two million subscribers in the next three months. “Our revenue growth has slowed considerably,” Netflix told shareholders on Tuesday.
The major drop in subscribers caused Netflix to lose more than $50 billion off its market cap. The streaming giant is now the worst-performing stock of 2022 in the S&P 500, down 62.5 percent year-to-date. Netflix cited multiple issues for its poor growth, including increasing competition and the lifting of pandemic restrictions that had previously boosted the platform’s viewership.
Netflix also pointed to password sharing as a major issue, estimating that 100 million households are sharing their subscription with family or friends. Netflix CEO Reed Hastings has previously described the practice as “something you have to learn to live with,” adding that in many cases password sharing is “legitimate” between family members.
Hastings stated on Tuesday that password sharing was making it increasingly hard to attract new subscribers in some countries. “When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it,” he told shareholders.
Netflix may sool roll out payment plans it is testing in Latin America worldwide. The aim is to have users pay slightly more in order to add extra account profiles and allow password sharing. “The principle way we have is asking our members to pay a bit more to share the service outside their homes,” said Greg Peters, Netflix’s chief product officer.
Bank of America analysts said in a Wednesday note: “Although their plans to reaccelerate growth (limiting password sharing and an ad model) have merit, by their own admission they won’t have noticeable impact until ’24, a long time to wait on what is now a ‘show me story.’”
Pivotal analyst Jeffrey Wlodarczak wrote in a Tuesday note: “After what can only be called a shocking 1Q subscriber miss and weak subscriber & financial guidance we reduced our subscriber forecasts and pushed back our profitability forecasts substantially.”
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter