Netflix shares have plunged over 50% since the beginning of the year, making it the worst-performing stock of 2022 in the S&P 500. Netflix promoted that they'd have an additional 2.5 million new users in the first quarter, yet they lost over 200,000. This caused the stock to drop even further than its one-year trend was headed.
The company is blaming the dip on the economy but it's apparent that brokerage houses believe there's more to it. If it were just the economy, they'd ride the stock out further and hope for an uptick, but this isn't the case. They're cutting the stock price in half and are trying to dump it on other investors and get it out of their portfolios. Maybe now is a good time to buy their stock, I don't know. They showed some intelligence by pushing for original content like Netflix original movies and television shows before most people even saw the need. Maybe there's hope for them.
I do believe first and foremost that inflation has made many households review their cable/media/satellite packages to see where they can cut cost. It's usually one of the first places households go to save money. But I also think that there's subscription fatigue in the market. I can hardly keep up with all the entertainment avenues there are like Amazon Prime, Apple TV, Disney+, Hulu, Paramount +, Peacock, Starz, and multiple other streaming platforms. At one point Netflix was the only game in town, now they're just a face in the crowd.
By the way, other streaming platforms are beginning to lose customers as well just not at the crazy rates that Netflix is losing customers. The biggest problem being that they aren't getting the contract renewals they'd hoped for. People spend their year in entertainment purgatory, and then cancel their memberships to save money or buy into a different network. So, it's not like there's more money pouring into the industry, it's the same money being moved around to different networks based on shows people want to watch. Just one big pie being cut into thinner and thinner slices.
I believe another issue is program content. For example, the reason my wife, Maggie, and I purchase a subscription to the network Peacock, is due to our love of the television show Yellowstone. This show was enough to get us to become a subscriber. We subscribe to Starz because of the show Outlander. I subscribed to HBO Max so I could watch Game of Thrones. In my mind, if I were to drop something to save money, it would probably be Netflix versus these other three networks.
I hope Netflix can get back on track because it's been a lot of fun watching them over the years outperform their competitors with their forward thinking. The story of Netflix's evolution would make for an awesome documentary.
The company is blaming the dip on the economy but it's apparent that brokerage houses believe there's more to it. If it were just the economy, they'd ride the stock out further and hope for an uptick, but this isn't the case. They're cutting the stock price in half and are trying to dump it on other investors and get it out of their portfolios. Maybe now is a good time to buy their stock, I don't know. They showed some intelligence by pushing for original content like Netflix original movies and television shows before most people even saw the need. Maybe there's hope for them.
I do believe first and foremost that inflation has made many households review their cable/media/satellite packages to see where they can cut cost. It's usually one of the first places households go to save money. But I also think that there's subscription fatigue in the market. I can hardly keep up with all the entertainment avenues there are like Amazon Prime, Apple TV, Disney+, Hulu, Paramount +, Peacock, Starz, and multiple other streaming platforms. At one point Netflix was the only game in town, now they're just a face in the crowd.
By the way, other streaming platforms are beginning to lose customers as well just not at the crazy rates that Netflix is losing customers. The biggest problem being that they aren't getting the contract renewals they'd hoped for. People spend their year in entertainment purgatory, and then cancel their memberships to save money or buy into a different network. So, it's not like there's more money pouring into the industry, it's the same money being moved around to different networks based on shows people want to watch. Just one big pie being cut into thinner and thinner slices.
I believe another issue is program content. For example, the reason my wife, Maggie, and I purchase a subscription to the network Peacock, is due to our love of the television show Yellowstone. This show was enough to get us to become a subscriber. We subscribe to Starz because of the show Outlander. I subscribed to HBO Max so I could watch Game of Thrones. In my mind, if I were to drop something to save money, it would probably be Netflix versus these other three networks.
I hope Netflix can get back on track because it's been a lot of fun watching them over the years outperform their competitors with their forward thinking. The story of Netflix's evolution would make for an awesome documentary.
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