Wednesday’s significant drop in Netflix (NFLX) shares opens up space for discussion on what the company will follow.
Who doesn’t know Netflix. Perhaps the most used platform for movies and series. Potentially the most iconic stock of this decade. A company that has completely changed the film industry and the social perception of video production.
Maybe, like me, you’re looking for answers today on whether this might be the right time to buy Netflix shares. Looking at the unprecedented drop in the stock price, I came up with one relatively important question that can help us better understand this giant in the field of streaming. Short Netflix the streaming giant has fallen by 67.9%, this number may not be final, of course.
Netflix announced its financial results for the first quarter of 2022. The streaming service lost 200,000 subscribers. That in itself was very negative news. The loss of customers occurred for the first time in more than 10 years.
The decline this year was partly due to Netflix’s decision to withdraw from Russia in protest against the war in Ukraine, which led to loss of 700,000 subscribers. Company lost 600,000 subscribers in the United States and Canada. The only region to show growth was Asia, with more subscribers in Japan, India and the Philippines.
In 2021, Netflix gained 18.2 million subscribers. This was the weakest annual growth since 2016. In 2020, the company recorded an increase in users by 36 million. However, this is mainly attributed to the coronavirus pandemic and lockdowns.
In addition, Netflix anticipated gaining subscribers in the quarter. There was even talk of 2.5 million new customers.
Result: The company lost 200,000 subscribers
As soon as investors heard this negative information, there was a panic and a drop in the price of Netflix shares. On Wednesday, April 20, 2022, they “lost” more than 25% of their value in the premarket. During the whole day, the price of the NFLX share fell by about 35% on Wednesday. Overall, there was a 67.9% drop from the top.
The decline is far from over. But the shares are already undervalued and have returned in time by a year. As we know, any company that loses customers and reports smaller sales will fall on the stock market, but this is too big a blow for NETFLIX owners. However, we expect that the exchange rate could reach a bullish pace next month and rise above USD 330 per piece, where we see the closest resistance. Each such decline will reveal a subsequent awakening of the bullish and whales will not be missing.
Anyway, in conclusion, I must mention that these are not investment recommendations and always do your own analysis.
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