Netflix Loses 800,000 Customers – Stock Down 27%

October 25 00:00 2011

New York, October 25 (RainbowNewsLine.com) – Netflix (NASDAQ: NFLX) is passing through a crisis situation. Its third quarter financial report has shaken up its customer base with an exodus of 800,000 customers which is even larger than the jolt that it got after its unpopular announcement of a price increase in July. Netflix stocks plummeted by 27 percent after the earnings report and the exodus of its subscribers.

In July, customers were riled by the separation of its DVD and streaming services, hike in prices and the spinning off of the DVD service into a brand dubbed “Qwikster” – a decision that had to be reversed.
Netflix CEO Reed Hastings said in a letter to investors that “We’ve hurt our hard-earned reputation, and stalled our domestic growth, but our long-term streaming opportunity is as compelling as ever, and we are moving forward as quickly as we can to repair our reputation and return to growth.”

Netflix’s earnings rose 65 percent in the third quarter but its shares plunged 27 percent leading to the exodus of its customers. However, it is expected to perform better in the next few quarters since it has been striking deals to add more content, as reported by Daniel Ernst , an analyst at Hudson Square Research. He said, “The new (subscribers) coming in has accelerated. There won’t be much of that in the (fourth) quarter, because they’ll still be working through the cancellations, but they should see growth in March. But the market doesn’t believe that right now.”

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