UPDATE, 5:30 PM: It looks like the deal Netflix announced this morning to expand into the UK and Ireland will take its toll on the company, which said during its post-earnings conference call with analysts that it will lose money for a few quarters owing to those costs. As a result, Netflix will suspend international efforts until the company returns to profitability. Weak subscriber numbers also were to blame for the ugly day: the company ended the third quarter with 23.8 million subs — about 200,000 fewer than it anticipated. “We became a symbol of the evil, greedy corporation,” Hastings told the AP. “Then we faced a reputational hit that created significantly more cancellations than we anticipated.” The churn rate almost doubled compared with a year ago and is expected to remain high thanks to fallout from Netflix’s 60% fee hike. “We’ve seen a second wave of cancellations from the price increase,” Hastings said on Monday’s analysts call.
It’s that kind of uncertain outlook that pummeled shares after hours: The stock fell $32.01, or about 27%, to $86.83 in extended trading Monday afternoon. If that decline holds up, it will mark the first time Netflix’s stock price has fallen below $100 in nearly 14 months, the Associated Press says. It’s an amazing fall for the subscription movie giant, whose shares had already lopped 61% off their all-time high in mid-July. Its market cap has gone from $16 billion-plus to about $4.5 billion in three months’ time.
All this as Netflix today reported that revenue rose 49% to $822 million and income climbed from $38 million a year ago to $62.5 million in the quarter that ended September 30.
PREVIOUS, 1:19 PM: Netflix shares are currently down more than 18% in after-hours trading after the company reported 3Q earnings that beat Wall Street estimates in revenue and earnings per share. But the problem for investors is that the number of fleeing subscribers was even higher during the quarter than even Netflix anticipated when it revised down its guidance for the period owning to its recent missteps that included a price hike the splicing and re-splicing of its streaming and mail services. Stay tuned for the full numbers, but it’s wild to see Netflix stock drop below $100 as we speak. For the quarter, the company reported revenue of $822 million, beating estimates of $812 million, and earnings per share of $1.16, which is better than the predicted 94 cents. But shares are falling because of subscriber losses (800,000-plus in the quarter) and lower 4Q guidance for revenue, income and subs.