Remember the good ol’ days of 2019 when the FAANG stocks of Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google (GOOG) were riding high and making money for everybody?
I sure do…
Man, that was great, wasn’t it?
All of these internet-based stocks were on a TEAR – if only they had some kind of event that would have forced the world indoors so they could REALLY pocket some cash.
Oh, that’s right, the COVID-19 pandemic made these companies rich beyond belief!
So, why is it that Netflix is sinking like a ROCK (and I don’t mean the movie star)?!
Well…
That’s what we’re going to explore.
I don’t mean to be crass…
But what the #*@#$ happened to Netflix (NFLX)?!
At one point – it seemed that there was NOTHING that could take this company down…
It was streaming great movies, creating some original and compelling content and were the first to do so – so how did a company that was making money hand over fist – wind up dropping 37% in value?
Well – much of it comes down to the fact that Netflix lost a whopping 200,000 subscribers in Q1 of 2022.
This loss is gargantuan – and the first of its kind in Netflix’s relatively short history.
Was this the sole reason Neftlix shares dropped 37% basically overnight?
Pretty much, as the rest of the numbers weren’t that bad…
As the company revealed it earned $3.53 per share (beating expectations of $2.89 per share) and ALMOST hit its revenue target by bringing in $7.87 billion, narrowly missing estimates of $7.93 billion.
Netflix is blaming the subscriber loss on the Russia/Ukraine war, which Netflix says cost up to 700,000 subscribers due to ending operations in Russia over the invasion…
Keeping that in mind – we should have only seen a 10%-15% drop in Netflix shares, right?
Well, it could be because investors see this as the start of a WORSENING trend as the company has admitted that it expects to lose another 2 MILLION subscribers throughout Q2.
That’s a lot…
And so, it seems that the company is going into desperation mode – and is cracking down on one of the biggest benefits of having a Netflix account: sharing your password with the ones you love.
That’s right…
If you’re a family sharing a Netflix account – that’s going the way of the Dodo.
The company said that of its 222 million paying customers – close to half of them – about 100 million – are sharing their accounts…
So, to improve on subscriber growth – Netflix warned that it will be cracking down on this practice – and either ask for more money for shared accounts or force people to get their own accounts.
That’s not good…
However, the s**t show doesn’t end there – as the company also revealed that it will be cutting back on new-content spending, and worse yet – exploring an ad-based platform as well.
No bueno – but this is all a symptom of a bigger problem…
And that’s the fact that Wall Street is waking up to the fact that the days of excessive subscriber growth for companies like Netflix, Amazon, Disney+ and others – are over.
These companies must now fight tooth-and-nail just to maintain their numbers – forget about hypergrowth – survival is now the key.
Don’t get me wrong: Netflix isn’t going anywhere…
It’s a solid company with an impressive business model – but it’s no longer a high-growth tech stock – it’s now a blue-chip company.
That changes everything.
These are the times in which we live…
And investors need to accept that things are going to be different from here on out.
This is why GorillaTrades is the right service at the right time – as we can help you navigate this new and weird financial landscape.
Our recommendations are based SOLELY on data and numbers – no guesswork needed, no hunches – just reliable information.
If you’d like to keep guessing which direction the market is headed and which stocks are worth a look – then continue with what you’re doing…
But if you’re ready to profit from today’s markets – consider subscribing to GorillaTrades today!
“Growth demands a temporary surrender of security.” – Gail Sheehy