UPDATE, 2:10: PM: Netflix closed at $60.28, which is -25.02% – and its lowest closing price over the last 52-weeks. During the trading day it also touched $59.20, the lowest intra-day price for the last 52 weeks. Trading volume was unusually heavy, at 24.7M shares; that’s the fourth biggest trading day for Netflix over the last year. Netflix’s stock began its dizzying decline shortly after July 12, 2011 when it announced that it would split its DVD rental and streaming businesses — and require consumers to pay 60% more to receive both services. The day after that announcement it closed at $298.73.
PREVIOUS, 10:21 AM: Company shares are down more than 25% at midday, and are close to a 52-week low. The plunge follows Netflix’s earnings report last night that warned it could fall short of its hoped-for 7M gain in domestic streaming subscribers for 2012. The company also said it expects to report a loss in Q4 as it invests to expand in another overseas market. B. Riley’s Eric Wold downgraded Netflix to “sell” this morning — and reduced his price target to $50 from $80 — saying that he’s “concerned that [Netflix] is expanding too quickly within int’l markets as domestic competition ramps.” Others lowering their target prices include J.P. Morgan’s Douglas Anmuth (to $63 from $87), Barclay’s Anthony DiClemente ($80 from $95), Janney Capital Markets’ Tony Wible ($53 from $67), Credit Suisse’s John Blackledge ($100 from $115), and Susquehanna Financial Group’s Vasily Karasyov ($70 from $95). Bernstein Research’s Carlos Kirjner is sticking with his $71 target but says he’s “not convinced that the domestic streaming business is profitable enough or even that the current profitability path is sustainable to justify the company’s aggressive pursue of its global ambitions. To a large extent, what is really funding the global expansion is the ‘mothballed’ and declining DVD business, which generated the majority of contribution profits.” Netflix’ market value is down 13.5% so far in 2012, and -78.7% over the last 12 months.
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