Netflix shares fall more than 30% after revealing loss of 200,000 subscribers

On Wednesday, Netflix shares took a sharp decline of 35.1 percent just the day after the company announced it had lost 200.000 subscribers during the first quarter of this year.

The shocking drop meant the stock closed at $226.19 at the finish of trading, and it was the steepest seen in a whole decade for Netflix.

According to FactSet, the last time the now-streaming service had such a large drop in one day was on October 11, 2011, when the stock sank 34.9 percent. The most dramatic one-day price decline took place on October 15, 2004, when the price of shares dipped 41 percent.

Investors previously predicted bullish tendencies on Netflix due to its position as a streaming giant and its unexpected growth during the pandemic, which led people to seek out ways to entertain themselves while being stuck at home.

Now, stiff competition has flooded the streaming market, which has put more pressure on Netflix to continue to amplify its subscriber base. But instead of being successful in doing that, Netflix saw a decrease in subscribers through the first quarter, and the company anticipates that it will lose another 2 million throughout the second quarter.

Some analysts are questioning how large the streaming market really is and whether the company’s initiatives to gain subscribers will work.

“It definitely suggests that there is concern within the industry about how sustainable the current situation is … and whether we need to kind of move towards a different model,” said analyst at GlobalData, Francesca Gregory.

Other analysts have cut their target price for the stock significantly. Kenneth Leon, a research director at CFRA Research, dropped his target price for Netflix stock to $290 per share, which represents a dramatic decrease from the previous goal of $525 per share, and he moved the firm’s recommendation from “buy” to “hold.”

Leon wrote in a note, “With NFLX subscriber growth coming to a stop with 222m paid members, NFLX shares are likely ot come under greater scrutiny about long-term growth.”