Netflix Inc. shares slumped last week and sending it to the bottom of the S&P index. The collapse has put the investors on edge as other quarterly results of extensive internet and technology companies are coming shortly.
The slump in Netflix
As per Bloomberg News, the Streaming video company is already down 64% after a 35 % collapse last Wednesday after an outlook on a declining subscriber base. Sharp swings are not new for Netflix, which was a winner during the pandemic days.
Since going public in 2002, Netflix has gained 20,000 %, making the stock one of the massive stock gains that outperformed the S&P 500 index. The S&P index has given a 500% total return for the same period. In between, however, Netflix slumped many times; the most notable was in 2011 when it was transitioning into the streaming platform.
Netflix pursued splitting its streaming services with its DVD rentals by mail program, renamed Qwikster for a brief period. Such miscalculations led the company to lose its subscriber base, which was the last time until the recent quarter.
The company took a bold step in 2013 when it ventured into the expensive original programming that paid off when this became the first-ever streaming service platform to win the prestigious Emmy award.
The stock recorded steady gains from 2011 till the growth accelerated during the pandemic in 2020, with the only negative year being 2014. Millions of new subscribers joined and binge-watched shows like “The Queen’s Gambit” and “Tiger King” while the audience stayed indoors during the pandemic. The shares rose by 70% in 2020, and the audience stayed another 11 % in 2021, marking five straight years of double-digit growth.
Early this year, Netflix declined by 22 % after a disappointing outlook gave a lower number of news subscribers. The latest guidance, which is equally frustrating, has many investors questioning the company’s future growth prospects. Around 15 firms have downgraded the stock, which led to a drop of 70% from its peak in November, making it the most significant drawdown in recent years.
The investors are getting ready to earn reports from the FAANG group. On April 26, Google Alphabet Inc.’s report is due, and Facebook Parent Company Meta Platform is to release results on April 27, with Apple Inc. and Amazon.com Inc. reporting the following day.
