Once one of the most stable stocks on the market, Netflix looks to be heading towards disaster. With the recent price-increase of their service, the DVD rental power-house lost 800,000 of its U.S. subscribers; 200,000 more than they had projected. This shed their stock value to $32.01 a share, nearly 27% of its value, all the way to $86.83 in Monday’s extended trading.
Netflix CEO Reed Hastings said a price increase was necessary, however they should have taken more time to explain to the subscribers that the company needed the money to pay movie and television studios for rights to stream more videos over the Internet. “We became a symbol of the evil, greedy corporation,” Hastings said in a Monday interview with The Associated Press. “Then we faced a reputational hit that created significantly more cancellations than we anticipated.”
This marks the first time Netflix’s stock price has fallen below $100 in nearly 14 months. I personally cancelled my subscription over a year ago. With devices such as Apple TV and DirecTV Ondemand, I haven’t found much need to 1) wait for DVDs in the mail or 2) pay a recurring fee to watch streaming media. I would rather pay as I watch and I want to convenience of being able to watch when I want to. I hated the waiting for Netflix DVDs in the mail but the price was well worth it and the streaming was an added bonus. With the price-increase, it definitely isn’t worth it in my opinion.
It’s possible they’ll bounce back, but it definitely allows competition to begin leveraging their positions in the market where they can start making aggressive moves to capture this audience. Just comes to show how quickly things can change with Internet-based businesses. As an Internet Marketer how diversified is your business?