Why Netflix Lost $17 Billion in Value in One Day

In a week full of triumphant media news and announcements, Netflix took a bit of a hit when it reported subscriber growth far lower than projected. On Thursday, that reflected in the company's stock price on Wall Street, which dropped a full $17 billion in one fell swoop, according to The Hollywood Reporter.

Netflix projected 5 million new subscribers for this quarter, continuing its seemingly endless streak of growth. However, the final number reportedly came in at 2.7 million — just over half of its planned expansion.

Netflix reportedly saw more than five times its usual trading volume on Wall Street that day, as analysts made sense of the sour news. However, the $17 billion drop accounts for just a 10% drop in the stock's price.

Still, this was a huge stopping point for a company that has long seemed unstoppable. This week's report is the first time Netflix has lost subscribers in the U.S. since it first launched its streaming platform. Any gain that it did see came from international territories with more room for growth.

On Thursday, Netflix's stock price closed at $325.15 — $37.29 lower than at the start of the day.

Industry analysts scrambled to amend their projections of the company, with CFRA's Tuna Amobi dropping his 12-month stock price target by $25, and lowering his earning estimates for both the remainder of 2019 and 2020 overall.

There are many reasons being considered for the poor showing from Netflix this quarter. Michael Nathanson of MoffettNathanson wrote that the previous estimates of Netflix's value were "downright psychedelic," noting that "U.S. subscriber adds turned negative on the back of $1 to $2 price hikes and an underwhelming content slate."

Others pointed to Netflix's rising competition, which stands to rise in earnest starting later this year. This includes servers like Disney+, Apple TV+ and HBO Max, all of which will come with their own can't-miss original material. In addition, they will do their best to withdraw the material they licensed to Netflix for their own libraries.

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On social media there seems to be contempt for some of these services, as users complain that they will soon have the equivalent of a cable bill between all their streaming platforms. From the looks of it, at least some are taking preemptive action, dumping Netflix in preparation for picking up its competitors.

Netflix did not issue a statement on the drop in value following its quarterly report. A new batch of content hit the streaming service over the weekend.

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