Netflix hammered as subs tumble
October 25, 2011
By Chris Forrester
Online streaming company Netflix saw its share price fall back more than 25 per cent in late trading October 24th. Netflix revealed that its subscriber cancellations were greater than expected, and that launching in the UK would take it into losses.
CEO Reed Hastings, in a letter to shareholders that accompanied its Q3 results, admitted that the past three months “have been difficult for shareholders…. and many members of Netflix”. The company said the problems of splitting the business into two, increasing prices, re-branding and cancelling the re-branding, had hurt its hard-won reputation.
Netflix share price stood at an impressive $300 back in July, but fell to a low point of just $87 in after hours trading late on Monday. Hard data shows that both sides of the new business were losing support. Postal DVD subscribers are cancelling, while streaming customers are also down.
Despite these problems its revenues are up, at $821 million for the quarter, and well ahead of last year’s (same quarter year) $553 million.