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.


Hastings and the rest of the Netflix team missed the point – the price hike was simply too high. Too much competition, too many platforms.
Drop the price, and watch subscriptions grow again.
Not gonna happen; or at least it should not happen. They’re better off sticking with their current pricing and letting customers discover the alternatives out there aren’t that much better.
Got that right!
Almost double your fees and offer your customers nothing new but abuse and guess what? Your clients leave. Blockbuster puts out a new commercial staring Netflix and Saturday Night Live does a comedy skit based on Netflix’s stupidity. I have been a loyal customer since it’s beginning and my repayment is a kick in the teeth.
OUCH! It’s scary how ONE mistake can send everything you’ve worked for over the last decade down the drain. Poor Hastings…
That’s simplifying things a bit… the mistake of the price hike was compounded by the poor PR before and after the decision which never attempted to justify the price hike.
It was hardly just one mistake. It was a series of them in quick succession.
What Netflix did paled to the way that Reed Hastings only responded to the suck-up messages on the announcements and completely ignored the valid criticisms or questions of the other 99% of his customers.
And anyone who raves about Red Box or Blockbuster is a fool because neither of them has anywhere near the movie catalogue that Netflix does which is why Netflix will remain number one in most people’s lives.
I’m sorry, but I personally find this HYSTERICAL. “Just when you thought it was safe to gouge your loyal customer base…”
FULL DISCLOSURE: I’m a total hypocrite. I’ve been barking about dropping Netflix for months now and due to chronic laziness and the Netflix autopay feature that quietly takes out its $22 a month, I have done nothing.
THANKS IN PART TO HOWARD STERN! HE HATED PAYING $18 BUCKS A MONTH ACCORDING TO HIS CREDIT CARD BILL. AND HE FINALLY SAW “CAPTAIN AMERICA” WITH NO HELP FROM NETFLIX, AND LOVED THE MOVIE.
Well, since studios don’t allow Netflix to carry most recent movies, it’ doubtful he could have seen Captain American regardless of the pricing structure change.
On top of all that they’re playing weird games with content availability. I watch their deep catalog titles and have seen wild swings in availability. One day I’ll be streaming a show from the 80′s and the next it’s unavailable without notice or explanation. I’ve seen the same happen with disc content.
After putting up with all the wild pricing and organizational gyrations, I’m considering canceling my account for the first time over content availability.
This happened to me as well and it was extremely frusturating. Also, I’ve come across the issue of a tv series being Watch Instantly and then come across ONE disc that must be requested via mail. Uhm, what?
It’s so sad, because they’ve done all this damage to themselves. I was (am) a hardcore Netflix supporter and probably a profitable customer- only ordered about 1 DVD per month and cancelled that portion of my subscription because the price hike.
I like Netflix. I think they need to open stores like what Blockbuster has to make it easier for customers to have quicker turnaround of DVD’s.
Isn’t this just as much a debacle for CONTENT MADE BY HOLLYWOOD as it is by Netflix. I think the the way Netflix conducted itself was pretty poor, but if the content was ANY good, the drop off would have been less. Yes/No?
Haha…Same here! I’ve been all talk, no action!
If hastings will still be at the helm, they really need to re-configure this crazy subscription and pricing plan and start lowering the prices to their services, if they wantany traction of brining subscribers back; otherwise, the news won’t be too good for Hastings and his staff at Netflix.
OMG I have to pay almost $20 a month to have a access to a ton of films.
Yet one ticket and a bottle of water is $20 dollars at almost every theatre
What are we complaining about?
I think Netflix could close by next year.
Sounds like a good time to buy stock in Netflix. Still kicking myself for not buying years ago.
The Reed Hastings apology tour continues!
There are so many alternatives its suicide for any media company to not practice rule number one of any service industry: satisfy your customers. It seems as though Netflix has spent their 2nd and 3rd quarter of 2011 unapologetically disregarding customer satisfaction domestically while focusing on international reach.
The cable companies should be taking advantage of this as these moves may be driving customers to premium cable subscriptions where they can also be assured to get HBOGo, WatchESPN and bundle with a $7.99 monthly for Hulu + to round out their additional mobile content reach, all for the same price as Netflix.
In the meantime, there are 800,000 content hungry paying customers out there who distributors are hoping will increase box office revenues and may now only consider giving Netflix money when the stock hits $40/share.
I bailed on Netflix to pay for satelite long before the price hike. Haven’t missed Netflix really. New pay-per-view at the cost of a blu-ray rental. The money I would be spending on a NetFlix Blu-Ray DVD plan with streaming works much better toward a quality premium movie package. IMHO.
The price hike did not help but the most damaging were comments and lack of respect for long time customers like me.
Hastings and his cronies basically told customers to take or leave it. So customers left.
Hastings has been acting strange lately. He slapped customers with a price hike then told them to go fvk themselves.
Exactly, I remember reading a quote from the VP or someone high ranking basically telling the consumers to “get over it” and they don’t have to put up with the unfair backlash, something along those lines. Their Twitter feed remained silent for days while customers were freaking out. They treated their base like they were expendable and now they’re seeing the consequences.
I am both a subscriber and an investor in Netflix. Just today, I was very happy to see the new product I could view on both DVD and streaming. I will get more, paying more. Everybody wants something for nothing. Now, as an investor who made $25,000 prior to the fall and is now $60,000 in the hole, my concern is that the company’s management may not be able to seduce the mass of people needed to take today’s excellent earnings numbers and multiply that into a stock price increase- before someone like Amazon (which does Netflix’s cloud already) makes them a buyout offer at the reduced price….leaving me with a loss.
If that were true, they wouldnt have lost the amount of subscribers they did.
I’m one of probably many who are torn by the fallout from Netflix and Hastings poor decision making. I love Netflix but I really did want to see them suffer a little for the arrogance with which they treated their obscenely loyal customers. That’s really the point, we must remember. It was one part the price hike with no extra perk (in fact, they PULLED many streaming TV shows down after the hike) but two parts the “we’ll raising your f’ing prices and you’ll eat it because we’ve already destroyed the competition” messaging. When that shitty attitude is the reward the consumer gets for staying with them all these years, waiting patiently for dvds in the mail instead of stopping by the formerly evil Blockbuster on the way home, then they deserved the pain their experiencing now. You’d think they’d consider dropping the prices just a LITTLE bit, but why bother. They’re still showing a profit. For now.
I want to publicly thank Hastings for providing me with the impetuous to change my life for the better. My Netflix membership was low my financial radar before Hastings nearly doubled my fee. Thanks to him, I got off my mouse butt and I found the links to financial freedom! While I was a Netflix lemming, I spent way too much time in front of the Boob tube looking for a return on my investment. Now I have the time to concentrate on more important things like brewing beer, playing golf and servicing the wife. Post Netflix life is great!
So.. what is tha alternative to Netflix? I ‘will’ drop Netflix for a better movie selection and better price.
I would totally understand the price hike if it came with a larger library of streaming movies. DVD/Blu-Ray is dying fogeys. Whoever corners the streaming market will own TV/Movie distribution in the near future. Netflix has a viable platform for this, they just need to put the puzzle together.
The fact that you can use the same netflix account to login onto any computer remotely is awesome, and I’m not sure if everyone out there truly understands how you can leverage to get the most of out a Netflix account. I’m pretty sure there are 3 people using my one netflix account, and that price hike doesn’t hurt too much if split 3 ways.