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Netflix loses 800,000 subscribers (stock drops 28%)

money.cnn.com

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Re: Netflix loses 800,000 subscribers (stock drops 28%)

#31

Post by jxcole »

dr_ wrote: post #27

Hastings should have stayed the course with his decision. Can't just impulsively react to every analysts opinion and run your company that way. Raise prices as needed, you will lose subscribers in the short run but in the longer run you will hopefully keep providing better content and will then start gaining subscribers. They also maybe should have made a play for Hulu.

I actually respect the CEO very much who realizes he has made a wrong decision and backs away from it. It shows the type of humility that almost no one in that position has. Furthermore, companies exist to make customers happy, so if the customers were unhappy from this decision I can hardly blame him for reversing it.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#32

Post by sliverstorm »

badclient wrote: post #11
gkoberger wrote: post #3

I feel bad for Netflix. They're between a rock and a hard place. The content providers want more money and eventually want to cut out the middleman. The users balk when the price is raised, even though unlimited streaming and DVDs for a month still cost less than a decent meal. And every decision they make (like Qwikster, which was likely done so they didn't have to pay content providers a fee for users who weren't s…

still cost less than a decent meal So many great things on the web cost less than a single cup of Starbucks. Yet, I myself am so hesitant to pay for them. On my landing pages I design at work, I'm increasingly trying to communicate this via comparisons("less than a morning Starbucks trip"). Another one is showing a dollar bill to communicate that for less than a dollar a day, they will get _____. For a service that w…

This says things about the prices at Starbucks as much as it says things about the web. :)

Also, with food, even if it is terrible you can still eat it. It's a no/little risk investment.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#33

Post by Klinky »

JohnTHaller wrote: post #22
goodweeds wrote: post #18

Earlier quoted context omitted.

I'm willing to bet that a lot of those users, like myself, said "I've had these same 2 dvds for the past year. The streaming selection pretty much sucks and I end up watching B-movies when I'm bored because nothing I want to watch, and haven't seen before, is in their library. I should send these 2 dvds back and cancel". I've long switched to itunes or Amazon when I want to watch movies because they tend to have the…

Of course, you don't really 'own' the movies through iTunes or Amazon either. And Netflix's stream servers have plenty of bandwidth to serve up. I use it daily without issue and HD programs, so it's not the servers. More likely, it you're internet connection or their overburdened peer connection to Netflix's peer. Either way, not something really in their control. As most internet service is getting more unreliable (…

No where did he mention concerns about owning a movie. I personally can really only stand to watch a movie once, I don't really care to own a movie.

As for his internet connection, that probably should be Netflix's concern. Most people aren't going to go through the hassle of changing their ISP for Netflix & it would be rather silly to expect him to continue paying for a service that doesn't work with his ISP or his viewing habits.

Netflix needs to be more aggressive with ISPs & content providers. They've seemingly rolled over time & again to ISPs & content producers while irritating their customer base.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#34

Post by dustinupdyke »

gkoberger wrote: post #3

I feel bad for Netflix. They're between a rock and a hard place. The content providers want more money and eventually want to cut out the middleman. The users balk when the price is raised, even though unlimited streaming and DVDs for a month still cost less than a decent meal. And every decision they make (like Qwikster, which was likely done so they didn't have to pay content providers a fee for users who weren't s…

Not understanding your customer in this day and age when there are so many effective ways of doing so is inexcusable.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#35

Post by esrauch »

ShabbyDoo wrote: post #9

So, Netflix increased prices by a pretty high percentage and managed to lose only four percent of subscribers? This is astoundingly impressive. Furthermore, many of these deflections might simply be the result of forcing subscribers to explicitly choose to continue service. How many people kept paying a few dollars per month for a service which they did not use and, when forced to choose a new plan, opted out?

> So, Netflix increased prices by a pretty high percentage and ...

Except I have netflix and I am paying no more than I used to, and I don't think that my situation is unusual. The percentage of people who were impacted at all by the price change that chose to discontinue service is some number larger than 4%.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#36

Post by Klinky »

ShabbyDoo wrote: post #9

So, Netflix increased prices by a pretty high percentage and managed to lose only four percent of subscribers? This is astoundingly impressive. Furthermore, many of these deflections might simply be the result of forcing subscribers to explicitly choose to continue service. How many people kept paying a few dollars per month for a service which they did not use and, when forced to choose a new plan, opted out?

Four percent in a single quarter is huge, especially if it reverses a consistent growth trend.

Starz will be going away in Feb 2012, a few months from now. Dreamworks will not be coming online until 2013. Thinking Netflix's stumblings have been completely contained within the last quarter may be a bit foolhardy.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#37

Post by 0x12 »

That leaves 23.8 million, and even though you might do weird extrapolations and predict they're gone in 2.5 years tops in reality it is amazing that they managed to do this and only lose a percentage that small.

Given that the majority of the 'leaves' will do this right at the front the next quarter will give you an idea if this is going to be the end of Netflix or whether they just managed to substantially improve their margins.

I think it is too early to call.

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#39

Post by sudonim »

I was looking at purchasing shares in Netflix the first time the stock dropped. I believe at that time netflix was trading at 35x earnings. At the close today it was 30x earnings and now even lower in after hours trading. I never bought the shares because of the high multiple. However, I believe the current bad news is a blip on the radar in what will continue to be a tremendously successful company. Can someone explain if I'm evaluating Netflix wrong?

Others seem all over the map:

    Apple trades at 14.6x earnings
    Amazon trades at 105x earnings
    Microsoft trades at 9.87x earnings

Re: Netflix loses 800,000 subscribers (stock drops 28%)

#40

Post by runako »

muhfuhkuh wrote: post #23
james33 wrote: post #2

Wasn't Reed Hastings named CEO of the year last year? $300 to <$90 in around 4 months. Hmmmm....

To be absolutely fair, though, NFLX should in no way, shape, or form be worth anywhere near $300 a share. Even $50 is pushing it. I'd think settling somewhere between 30-40/shr. is a good premium. They have to have multiple pipelines of revenue aside from "streaming non-recent movies and tv shows." Here's a strategy they can try: If they can score some day-after-airing TV shows a la Hulu and have them available for 3…

> I'd think settling somewhere between 30-40/shr. is a good premium.

$30-$40/share would give it a P/E multiple of between 7.5 and 10. Netflix has trailing 5-year EPS growth of around 35%. You may hate the company and the stock, but $30-$40/share would have it trading at a discount to other companies with similar growth histories. There's no case to be made for $40 being a premium for NFLX.

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