UPDATE, 7:40 AM: Did I say Netflix stock could “take a hit”? Let’s make that a left hook to the jaw. The company’s down more than 13.7% in heavy volume early trading on a slightly up day for the overall market. Analysts are lining up to take their whacks at Netflix: Lazard Capital Markets’ Barton Crockett, who has a “neutral” recommendation, calls the company’s reduced 3Q subscription forecast a “rare, large and surprising misstep.” And Susquehanna Financial Group’s Vasily Karasyov, also in the “neutral” camp, warns that 4Q subscriptions also could disappoint. Each 1M subscribers account for $11.2M in revenues and 2 cents in Netflix’ per-share earnings, he says.

PREVIOUS, 5:03 AM: Netflix stock could take a hit today: The company says this morning in a letter to shareholders that domestic subscriptions aren’t holding up as well as it anticipated in July after it announced that it would sell digital streaming and DVD rentals separately — raising the price of the combined service by 60%. Netflix says its 3Q report likely will show that it has 21.8M streaming customers, below the 22M it forecast in late July. And DVD-only rentals are way off: It now expects 2.2M subs vs 3M it anticipated. About 12M pay for both services, same as the July forecast. The company says: “We know our decision to split our services has upset many of our subscribers, which we don’t take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come.”

Adding to the bad news from Netflix, Janney Capital Markets analyst Tony Wible reiterated his “sell” recommendation this morning in a report that says subscription growth could suffer after February when the company’s due to lose movies and TV shows from Starz. The premium cable channel recently said that it won’t renew its contract. Netflix “is now asking its subs to pay more for less,” Wible says. He adds that “the loss of content could lead to fewer subs that lead to the loss of more content.” What’s more, the analyst wonders why execs including CEO Reed Hastings are selling so much of their own Netflix stock. “Bulls often praise (Netflix) management for being some of the smartest guys in the boardroom. However, one has to question why these smart individuals that presumably know more about the landscape than anyone else would be sellers and why lower level directors end up owning more stock than the CEO.”

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