Netflix stock loses nearly 40% of value Wednesday after subscriber loss

  • Netflix lost 200k net subscribers in Q1.
  • NFLX stock collapsed more than 25% afterhours, falling back to 2019 prices.
  • The leader in streaming is guiding for a further loss of 2 million subscribers in Q2.

UPDATE: Netflix stock dropped as much as 39% on Wednesday, one day after the streaming leader announced it had lost 200,000 subscribers in the first quarter. Shares were down closer to 30% in the premarket. An hour into the session, NFLX stock had climbed off a low of $212.51 to $221.20, still down 37%. Puts expiring this Friday at the $250 strike price have jumped 3,000% in value to $15.50. More than 5,200 contracts have traded hands in the first hour on Wednesday.

Netflix stock (NFLX) tumbled 25.7% afterhours on Tuesday after management's Q1 earnings report proved its doubters correct. Rather than adding the 2 million net subscribers it had predicted during the previous earnings call, Netflix announced a loss of 200,000 subscribers in total. This is the first drop-off in subscribers since 2011. With NFLX shares now down to $258.90 in Tuesday's afterhours trade, the streaming giant has lost  63% since its all-time high just five months ago.

Netflix Stock News: Guiding for futher losses

If there was any positive sign in the earnings call, it was earnings itself. Netflix reported adjusted earnings of $3.53 per share, more than 17% ahead of the $2.92 expected by analyst consensus. This positive mark was more than overshadowed by a straightforward revenue miss – $7.87 billion reported compared with a $7.94 billion forecast.

Worse than the 200,000 decline in subscribers was management guiding for another 2 million lost on net in the current quarter (fiscal Q2). In Q1 Russia amounted to a major negative lever. Suspending its Russian service due to the war in Ukraine cost it 700,000 subscribers. The US and Canada also combined to hurt subscription levels by 600,000. This latter group's dismal results were due in part to a subscription price increase during the quarter, although management said the price increase increased revenue overall in the region.

Management also blamed heavy subscriber gains during the stay-at-home Covid-19 pandemic for leading to a subscription drop-off now that the pandemic has largely subsided. Related studies show that both inflation and competition may be hurting streaming overall. A report from market research firm Kantar showed that 1.5 million industry-wide streaming accounts were abandoned in Britain during the first quarter. It said nearly 40% of cancelled subscriptions were due to saving money in this new climate of inflation. Another study, Fandom's State of Streaming Report, says that 61% of subscribers think their streaming subscriptions are too expensive.

"Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds," Netflix said in a statement.

One surprise during the call is that co-CEO Reed Hastings said he is now open to offering a cheaper, ad-based version Netflix, which is a strategy Netflix has ignored publicly for years.


NFLX key statistics

Market Cap $151 billion
Price/Earnings 30
Price/Sales 5
Price/Book 9
Enterprise Value $164 billion
Operating Margin 21%
Profit Margin


52-week high $700.99
52-week low $329.82
Short Interest 2%
Average Wall Street Rating and Price Target Buy, $503.36

Netflix Stock Forecast: Hopes that $253 holds

NFLX stock blasted right through support at $290 in the afterhours trade. $290 was the low from the initial Covid-19 panic. Now floating around $260 in the Wednesday premarket, investors can only hope that $253 holds up. This area of support stems from September of 2019. Yes, that is right. Netflix has lost two-and-a-half years of share price gains. If $253 does not hold, and there is a good chance it will not, then $231.50 is another target for bears. This was support during December 2018. With the Relative Strength Index (RSI) now at 21, NFLX is deeply oversold. This is, however, its second major plunge of the year after its 22% decline during the Q4 call in January. The best bet is not to jump into Netflix at such low prices, since this daily chart sure looks ragged at the moment.

NFLX 1-day chart

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content

Recommended content

Editors’ Picks

EUR/USD holds lower ground below 1.0750 amid softer risk tone

EUR/USD holds lower ground below 1.0750 amid softer risk tone

EUR/USD trades with a mild negative bias below 1.0750 in European trading on Wednesday. September Fed rate cut bets keep the US Dollar on the defensive and cushion the pair's downside amid the US holiday-thinned light trading. 


GBP/USD rises toward 1.2750 after UK inflation data

GBP/USD rises toward 1.2750 after UK inflation data

GBP/USD is rising back toward 1.2750 in the European session on Wednesday. The data from the UK showed that annual inflation, as measured by the change in the Consumer Price Index, declined to 2% in May from 2.3% in April, fails to deter Pound Sterling buyers.


Gold price remains capped as yields gain ground on Fed's hawkish narrative

Gold price remains capped as yields gain ground on Fed's hawkish narrative

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the vicinity of the $2,300 mark and oscillates in a narrow band during the European session on Wednesday. 

Gold News

Bitcoin technical indicators signal bullish momentum

Bitcoin technical indicators signal bullish momentum

Bitcoin price action shows a bullish divergence on a momentum indicator. Ethereum price finds support around $3,362 price low from Friday. Ripple price faces rejection by its daily resistance level of $0.499 level.

Read more

Investors' focus will be on Europe

Investors' focus will be on Europe

In the euro area, the EU commission will reveal against which countries it recommends opening an excessive deficit procedure (EDF) due to breaches of the EU fiscal rules.

Read more