Netflix is reportedly experiencing a “loss” after losing a market capitalization of US$50 billion (Rp 717.5 trillion) overnight. It is known that the “loss” occurred due to the decline in stock prices. It’s even reported to be the worst-performing stock of 2022 on the S&P 500. That’s down 62.5% this year.
On Wednesday (20/4/2022), it was reported that Netflix shares closed down 35%. This comes after the company announced it lost the number of subscribers for the first time in more than 10 years, Thursday (21/4/2022).
Netflix noted several things that hindered the company’s growth. These include increased competition between streaming platforms and the lifting of pandemic restrictions in various regions of the world.
The streaming business does get a lot of advantages when the pandemic makes it a rule for people to stay at home. But due to vaccines and recent easing, people are spending less time on the platform.
Slow growth is also evident in household broadband. Netflix reports that 100 million households use sharing their subscription passwords with family or friends.
To increase growth, Netflix seeks several ways. For example, consider ad-supported tiers with lower prices and the possibility of imposing crackdowns on password sharing practices.
Some analysts are generally optimistic about this change. But note that this is not a short-term solution regarding the customer base.
But it’s not just Netflix that has seen stock declines. Shares of several compact streaming platforms declined.
For example, Disney Stocks declined 5.5% and Roku slumped 6%. Paramount shares plunged 8.6% and Warner Bros. closed down 6%.
“Gross incremental activity continued to slow than expected, as subscriptions could see similar pressures throughout this earnings season, although we note NFLX is unique in that it is much easier to penetrate, particularly taking into account password sharing,” Wolfe Research said in a note last Tuesday.
Previously, in the first quarter report ending March 31, 2022, Netflix lost 200,000 paid subscribers. That number is expected to continue to grow so that in the second quarter Netflix is expected to lose more than 2 million subscribers.
This action is the first in recent years. In 2016, CEO Reed Hastings said he had no plans to change the rules regarding account sharing.
But as time went on and growth stopped, Netflix’s attitude changed. Earlier this year the company also tested ways to curb password sharing in Chile, Costa Rica, and Peru, and said it could expand.
Netflix has not yet explained more concrete global steps regarding this issue. However, the streaming service giant said changes could occur as early as 2023.