Netflix reported Tuesday that many of its subscribers decided to drop their content service in the first part of 2022. With this news, shares dropped 35% Wednesday causing the platform to lose $50 billion. What does this mean? Is this a sign of things to change in the entire stock market? Will other companies following behind Netflix in shares dropping? October 25, 2021 Netflix had a high of $690.31 per share which I believe is the highest it’s ever been.. Mid-day Wednesday April 20, 2021 their shares are at $226.19.
This is a reminder that many see Netflix not as a tech company but as an entertainment content company. Content can be found on many other platforms and outside of your home now that many travel restrictions have been lifted in most areas. Netflix did not mention their most recent price hikes including the one that just took effect in March 2022. Trust me I know many people have considered canceling their service with every price increase.
Netflix reported it lost 200,000 subscribers in quarter one of 2022. Netflix blamed inflation, world events such as the war invasion of Ukraine from Russia, password sharing, and other media competition. Netflix expects to lose an estimated 2 million more subscribers in quarter two and estimated over 100 million households are password sharing.
I’m not sure if I agree with this. Most other content platforms did not just come around in quarter four of 2021 or quarter one of 2022. I also don’t completely buy that password sharing caused this many changes in a short period of time. I would like to see the difference of password sharing quarter over quarter for the past five years to see if their analysis holds true. I believe more so that the fear and reality of inflation would make more sense of some of the loss in subscribers. People are looking where they can cut costs with the increases in gas and food on a constant basis. Not to mention again the fact that Netflix increased its prices again this year. People are fed up with the price increases of digital products. Netflix is not the only media option to watch movies and shows unless you are wrapped up in their exclusive shows or movies.
I’m curious to see how Netflix stocks recover over the next month through quarter two for the company. Until then for those of us still subscribing, we will continue to watch and pay until we also make the decision that enough is enough on their next price increase.