Reed Hastings’ Apology Fails To Stop Stock Slide
Hastings Says “I Messed Up”; DVD Unit Will Split, Rebrand As Qwikster

The Netflix situation is becoming scary. The stock was down another 9.4% today, to $129.66. That means the company has lost 55.4% of its value since July 11, the day before it announced its decision to split the streaming video service from DVD rentals — upping the subscription price by 60% for those who still want both. Yesterday, CEO Reed Hastings apologized for his PR blunder by trying to gloss over that fact. He adding that the DVD-rental business will have a new name, Qwikster, and begin to rent video games as well. How low can Netflix go? Caris & Co analyst David Miller today slashed his target price to $103 from $185 and made his second downgrade in a week. Last Friday, he considered Netflix an “above average” investment. Now he says it’s “below average,” noting that the odds that the company will soon have its first quarter with $1B in revenues — which some analysts have expected — “are now fleeting at best.” Lazard Capital Markets’ Barton Crockett, who is neutral on the stock, called the Qwikster decision a “stumble” adding that many consumers will “be confused and never find the Qwikster website.” But Barclays Capital’s Anthony DiClemente maintained his recommendation for investors to “overweight” Netflix stock which he says could hit $260: Although moving the DVD business off into Qwikster “does add uncertainty” in the short term, he notes that it frees Netflix to make better decisions for video streaming — including ways to optimize its user interface for iPhones and iPads.