Netflix: That Sinking Feeling

Netflix (NFLX) fell 35% today and is down 62% since January 1st

Competitive stresses had been building for Netflix, which once had the market for streaming video all to itself. The dam broke last night, when Netflix announced that it had lost subscribers, and the stock fell precipitously:

The shares shed more than a third of their value, finishing down $122.42 to $226.19. The stock was the S&P 500’s worst performer of the day. Investors had expected that the company would add new users in the quarter. Instead, Netflix said it ended the first three months of the year with 200,000 fewer subscribers than it had in the fourth quarter and said it expected to lose two million global subscribers in the current quarter...

The fall in Netflix’s shares represented its biggest single-day percentage drop since Oct. 15, 2004, when it fell 41% after saying it would cut subscription fees and postpone planned international expansion. It slashed $54.3 billion from the company’s market capitalization, its largest one-day market cap loss on record...

“Nobody was expecting Netflix to announce they lost subscribers. They were expecting a slowdown in subscriptions, but seeing Netflix losing subscribers is a big deal,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, an online broker.

Your humble investor/blogger turned a modest profit on Netflix eleven years ago. At the time I was spooked by Amazon's entry into streaming video and thought that the much-larger company would eat Netflix' lunch.

Though I sold Netflix ten years too soon, there are only small regrets. I would probably have held on too long and watched a large Netflix holding fall by 35% in one day. Irrational, to be sure, but that's why you shouldn't listen to a blogger who gives free advice.