Investors are fleeing Netflix's stock and many subscribers have turned their backs on the Web's No. 1 video-rental service.
A combination of skimpy selection in Netflix's Internet-streaming library, problems acquiring content, and an unpopular price increase have led the company's leadership to what appears to be a crucial moment. Observers are beginning to wonder if Netflix's stunning growth of the past two years is coming to an end.
Netflix said today that it expects to report 1 million fewer U.S. subscribers in the third quarter than previously anticipated, a 4 percent shortfall. That number includes almost 800,000 fewer DVD-only subscribers than expected.
If you're one of those who cancelled a subscription hoping it would send a message to company managers, well, they got it and so did Wall Street. Netflix's stock closed trading today at $169.25 a share, down $39.46 or 18.9 percent.
Today's revised expectations raise important questions about the company. Netflix is supposed to have near perfect customer data and is supposed to be better than competitors at gauging customer tastes and trends. So, how could it set up Wall Street for disappointment by being overly optimistic about reaction to the price increase?
And with fewer subscribers and less subscription revenue coming in, will that hurt Netflix's ability to acquire content, which already appears to be flagging? … Read more