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2022 is a bad year for Netflix. The company saw its worst performance on the bourses after its share crashed by around 37% in a single day, leaving investors in the red and questioning the company's growth prospects.
The stock closed on the 19th of April at $348.61, a normal day for the stock which was consolidating in the range of $420-330 since February this year. However, 20th April spelled doom for the share as it opened at $245.20 per share, a 30% decline in price.
However, that was not the end of it. Investors were overcome with bearish sentiments as a selling pressure dragged the share down even further to touch a low of $212.51, a level the company hadn't touched since January 2018. Bulls managed to put up some resistance as the stock closed at $226.19, down 7.7% in a day.
2022 is a bad year for Netflix since the stock has been in decline since January 2022. On 3rd January, the stock closed at a price of $597.37 after falling consistently for a week.
The share got its first setback on 21st January 2022 when the share opened at $400.42 from a previous close of $508.25, wiping out over 20% in a single day. Yesterday was the second setback as the stock, which ordinarily sees a trading volume of 4-6 million, saw a trading volume of 132 million!
Yesterday's close at $226.19, marks a 62.14% decline in the share's price since 2022 began.
So, why is this happening?
Recently, Netflix announced that it was withdrawing all its operations from Russia, which was a huge dent in the subscriber base of the streaming giant. Adding on to it, the company raised prices in some countries recently and is facing fierce competition. This resulted in around 200,000 subscribers leaving the platform in the first 3 months of 2022.
What is the future for Netflix?
Netflix itself has warned its shareholders that another 2 million or so subscribers are likely to leave within the three months ending in July 2022. Netflix is facing fierce competition as its growth has slowed down considerably.
JP Morgan has reduced the target price for the share to $305, substantially below the Wall Street target of $400.
How is Netflix reacting?
The company estimates that around 100 million households are violating the company's rules by sharing passwords. The company said that it is working to curb the password sharing habit which is a major concern for them.
Since last month, account holders in Chile, Costa Rica, and Peru must pay for adding more profiles to their accounts. The company has said that it will think of a customer-centric approach to stop password sharing.
There is also talk that Netflix could launch a cheaper, ad-supported version of the app. Recently, Netflix had launched pocket-friendly plans for its subscribers in the Asia Pacific Region which saw a positive response from customers and brought in 1.09 million paying customers for the company from the region.
This version could be relatively cheaper than the ad-free version presently used by the customers. This was long overdue as major competitors of the platform, like HBO Max and Disney+, already have ad-supported versions. Moreover, Netflix is bringing in more content to improve user engagement with the platform.
By Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
