Netflix announced this Tuesday, April 19, that it had lost an exponential number of subscribers, partly because of the ongoing war in Ukraine. And now, after the streamer announced its plans to charge more money from people who engage in sharing their accounts outside their households, Netflix’s shares have plummeted to record-low numbers.
After a decade of incredible growth, Netflix has reached what is likely its lowest point. The company’s stock was already down more than 40% and now, the streaming platform’s shares have declined an additional 35%, which resulted in a $50 billion loss in market capitalization, the biggest loss for Netflix to date. On Wednesday, April 20, Netflix’s stock amounted to $226.19 per share. Earlier on in the year, the streamer lost $49 billion in market cap after Q4 subscriber adds did not do well and marked the slowing of its previous growth.
As a result of this unexpected plunge in stock value, famous billionaire investor William Ackman liquidated a 1.1 billion investment on Netflix. Ackman’s hedge fund Pershing Square Capital Management had purchased the shares a mere 3 months ago. According to BBC news, Ackman explained his decision by writing: "While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty.”
Between January of this year and March, the company lost 200,000 subscribers, and it expects to lose another 2 million between April and June. Reed Hastings, co-CEO of Netflix, justified that this fall in subscribers is to be blamed partly on “great competition” as well as the crackdown on an estimated 100 million households which share their passwords without any additional payment. As a plan of action, Netflix announced plans to increase prices for users with “sub-accounts” outside their household. In addition, the streamer plans to launch cheaper ad-supported tiers, something that is common for other streamers such as Hulu and the music platform Spotify.
According to Variety, Hastings made a comment on Tuesday saying:
“I know it’s disappointing for investors, and it is for sure, but internally, we’re really geared up, and this is like our moment to shine. This is when it all matters. And we’re super focused on achieving those objectives and getting back into our investors’ good graces.”
In spite of all these losses, Netflix is still the global leading streamer with over 220 million subscribers. The following months will determine how investors, as well as subscribers, regard the platform’s changes. You can stream Netflix's extensive catalog now with a subscription plan.