Netflix Stock Drops, Subscription Growth Projected to Slow

    April 24, 2012
    WebProNews Staff
    Comments are off for this post.

Netflix stock has been up and down lately, and it’s easy to understand why. Before the infamous summer of 2011, people always spoke very highly about Netflix, its ability to maintain steady growth, and the company’s desire to expand its streaming service into international markets. After a series of serious and unfortunate missteps — including the short-lived decision to split its DVD and streaming services into two separate entities — the company can’t seem to catch a break. Even with a strong ending to the first quarter, stocks still dropped during after-hours trading on Monday.

Investors seem a little concerned about a forecast that suggests subscription growth will slow during the second quarter, despite the fact that Netflix added nearly 1.7 million members since the beginning of the year. Traditionally, April through June has been a particularly slow time for the company in terms of drawing new subscribers into its fold. Analysts projects that Netflix will only add a paltry 200,000 new users during the 2Q, a fact which may have caused the company’s stocks to take an estimated 16 drop yesterday.

First quarter revenue, however, was up 21% from last year.

CEO Reed Hastings is hoping to combat the subscription issue by focusing on original content, a strategy which includes bringing the cult television series “Arrested Development” back for another full season. Unfortunately, this particular show doesn’t start production until sometime this summer, which means that Hastings and company will have to wait until sometime next year to see if their pricy gamble will pay off.

The company’s recent problems haven’t stopped Hastings from taking home an incredible amount of money as compensation for hurting the company’s reputation. Between his stock options and his regular salary, Hastings will reportedly bring home nearly $9.3 million. Not bad for a guy who alienated his subscribers by increasing their monthly rates and confusing the bejesus out of everyone by attempting to split the company into two entities.

All of this bad news is going down right as other companies are looking to take a section of the market away from Netflix. Amazon, Wal-Mart, and Comcast are offering streaming services, though none of them has the selection that Netflix currently offers.

For the time being, anyway.

  • Summer Fields

    I’ve been a Netflix member since 2007, for the most part I’ve been relatively happy until you do something like you did yesterday. My bill happens to come due every month on the 24th, no problem. However yesterday was Monday the 23rd and as we all know, new movies are released every Tuesday and instead of sending the movies at the top of my queue, the movies that were to be realeased on Tuesday the 24 you sent me 3 random stupid flicks cause my bill was due the next day. Well, I guess I see how you reward loyalty. I have canceled my membership and cant wait to give Blockbuster or Walmart or anyone else for that matter, my hard earned dollar bills instead of you greedy a$$holes. You’ll keep doing things like this to your loyal customers and pretty soon Netflix your competition will get the better of you. I pray that I am still living to see that day!!!

    • David

      Time to buy!

  • wd

    I have Netflix streaming for our family. My daughter is in college and they live on Netflix there so she uses it a lot. Netflix should really target those because a year of netflix is a great graduation gift for kids heading to college.

    We used to rent Red Box movies but we can always find something on Netflix streaming to watch. We dont subscribe to the DVD service so we dont get newer releases but if we ever wanted one we could do Red Box but we just never do anymore. Anytime people come over they grab our Netflix and see what’s on.

    I think Netflix has things coming up and we will just have to wait and see what they are. I did check out a similar service that had a free trial called Epix and it was a joke compared to Netflix.

    Its way worth the cost.

    I am looking forward to seeing what is to come with Netflix.

  • drbobnm

    I have been a netflix customer for about two years. At first, I was very excited about the service. But now, the selections (movies) seem to be getting worse by the week. Selections drop off the map, and things we liked are no longer available. They are also deceptive. For example search (google) a title of a movie you want to see with netflix in the search words. There will come a link that implies that netflix carries in in streaming, yet when you search within netflix app it is in fact NOT available. If there was an inkling of something substantially better, I would be gone in a heartbeat. Its just doesn’t justify it right now, but I use the service less and less; it takes a long time just to decide on something to watch, because the selections are so marginal.

  • flixster

    I think that Netflix, just as any other company, is reaching a point of obvious hard times. Who is to say they won’t recover? It’s time for consumers to be realistic and consider all the contracting and licensing that goes into obtaining movie titles that Netflix can offer. Movie studios need to make money too, and will not put their films on a website offering to watch them unlimited from almost anywhere for $7.99! One DVD costs TWO TIMES that amount. Get real, it’s a luxury service not a necessity. If you can’t wrap your head around that then pay $80 a month for DirectTV

  • Michael Robert Cramer

    I have had Netflix for two tears, and have watched it hit bottom with its selections. One thing I have seen you do is take movies down, and then a month latter advertise them as new selections. Your movies in most cases our old, and a share not even in English. I don’t want to start a movie that I soon find out is in English subtitles. Your selections are very weak eventhough you claim to have many titles. Most of your movies are either B rated or ones I seen 20-30 years ago. You have also included more episode selection, which to me is not a movie selection. I will dropping it, as most of your selections aren’t worth the money. Good idea, but terrible quality.

  • http://AOL Clopez

    First of all the streaming should be hd and plus when I see tv show I notice they have the same Year twice that need to be fix some show is not in full screen for now Iam going to a site where I could see whatever I want for free

  • Mickey J

    I’ve been with Netflix since streaming was still considered a part of their ” plan for future growth. ” As a result of last summers fiasco, I dropped DVDs from my subscription entirely ; while the streaming selection is, at times, MADDENINGLY limited, there are still enough appealing titles (I happen to get a kick out of some “B ” movies, and I find the selection of documentaries to be reasonably good) to justify the moderate cost.

  • http://www.boyekecj.com Eke mereije

    I like dat so I want to get in

  • Jojo

    I agree with Mickey J. The incoming and new choices of NFLX movies are, as he says, maddeningly limited (and getting poorer by the quarter). Sandie and I dropped DVDs as well, going only to live-streaming. Meanwhile, some of the influx of doc’s are encouraging. Problem with that is, I watch them mostly in retirement while my wife is still working. This forces us (me) to scout out never-seen ‘B’-movie selections for our weekend viewing together.
    I was fortunate to glean $10k on a $5k toe-dipping stock investment last year in NFLX’s heyday with my broker. But reading about Reed’s 68% take-home in spite of falling stock prices amongst increased competition has considerably lowered my opinion of him as CEO. Makes me think he may just be another ‘Buck-n-Cluck’ company-cruiser, jumping neighborhood fences through back-yard clothes-lines on Wall Street. Does anyone know a valid CEO? of any company? I’d be interested.

  • David

    I’m buying up on that stock!

  • tracy

    Netflix screwed up last year when they raised prices and lowered services. Netflix grew by word of mouth and family referrals, that is how Netflix will go down.