|"NETFLIX" shares tumble nearly 40%|
A dark day for Netflix shares: on Wall Street it lost 35.1% and the streaming TV giant saw its 58 billion market cap rise in smoke. The blow also froze the other big names in the sector, starting with rival Disney losing more than 5%. Spotify is also under pressure, down 9%. A widespread fear is a change in consumer habits. The tide of inflation, between expensive energy and expensive shopping carts, is eating away at the wallet and prompting to cut excess.
In addition, the newfound possibilities of resuming normal life after the lockdown and, above all, the widest choice of services and platforms. At the time of its release, Netflix was the sole protagonist in the market: now there are giants like Mickey Mouse, Apple and Amazon with more economic resources available and with diversified revenues that offer greater flexibility. To curb the public bleeding, traditional cable networks are also approaching streaming with arrogance and power, crowding the market even more. The slowdown in growth at Netflix is expected after the outbreak of the pandemic.
But no one thought about such a sharp decline in subscribers: in the first quarter it lost 200,000 and for the present it is estimated a decrease of two million . The losses are so impressive that the giant, which has been described as a “paradise without ads”, has opened its hands to advertising and this is to be able to offer subscriptions at lower prices and thereby curb flights but also to open up new subscribers. For analysts, this is a betrayal of an early promise that could backfire on Netflix.
"Those who follow Netflix know that I am against the complexity of advertising and support the simplicity of subscriptions. But I prefer even more choice for consumers," explains Netflix co-chief executive Reed Hastings. In a letter to shareholders, the streaming TV giant attributed the loss of subscribers, the first since 2011, to four factors, including inflation and the war in Ukraine. The conflict prompted Netflix to suspend its services in Russia with the loss of 700,000 subscribers. The company then mentions the growing competition and password sharing that has caused the loss of millions of customers and for which it will seek a solution.
While Netflix continues to grow in Asia, subscribers in the United States and Canada have fallen by 600,000 units due to rising prices. Netflix's breakout and subsequent collapse on Wall Street also caught the attention of Elon Musk, who was involved in the Twitter takeover.
Tesla's patrons defined it as "unwatchable" because of a "virus of common sense", or "a virus" for being cautious and wary of social and racial injustice. The analysis won praise from Musk's many Twitter followers, some of whom advised him to buy it.