Netflix shed $58bn in market value on Wednesday after gloomy quarterly subscriber figures sparked a steep drop in its shares that also spread to rival streaming groups.
California-based Netflix said late on Tuesday that its decade-long run of subscriber growth had drawn to an end in the first quarter of 2022 and that it had become “harder to grow membership” in many markets.
In an earnings update, the streaming company projected that subscriber numbers would drop by another 2mn in the current quarter, having already fallen about 200,000 in the previous three months.
Netflix shares fell more than 38 per cent in morning trading in New York on Wednesday.
The “sea-change quarter” prompted JPMorgan to cut its recommendation on Netflix from “overweight” to “neutral”, with analysts at the US bank flagging concerns over account sharing, market saturation and mounting competition.
Netflix’s announcement also hit the shares of other television and film subscription companies. Walt Disney, owner of the Disney Plus streaming service, fell more than 5 per cent, while streaming platform and hardware business Roku dropped about 7 per cent. Music streaming service Spotify slide more than 7 per cent.
Streaming services and stay-at-home stocks had “lost a lot of value over the last few months”, said Patrick Armstrong, chief investment officer at Plurimi Group. “The market was expecting this but nobody expected the [Netflix] subscriber losses to be as dramatic as they were.”
The US S&P 500 index bucked the fall in Netflix shares, trading broadly flat. The tech-heavy Nasdaq Composite lost almost 1 per cent.
In Europe, the regional Stoxx 600 gauge added 0.8 per cent in afternoon dealings, reversing the previous day’s fall.
In government debt markets, the yield on the 10-year US Treasury note dropped 0.04 percentage points to 2.87 per cent.
Additional reporting by Ian Johnston