Previous And Current Netflix Stock Crashes

My life is impacted by Netflix a lot. As soon as I come back from work, I turn over the lid of my laptop and start watching Friends. Before that, I was hooked on Bridgerton and all the likelihood is that I will probably have something on Netflix that I will like after I complete all ten seasons of Friends. This is why I got really worried when people started saying that Netflix stock is crashing. After all, if Netflix stock crashed, it might have entailed the end of Netflix which is my prime source of entertainment! This is when I put my Xfinity internet to use and started researching what was happening to Netflix. 

I know that I am not the only one who is worried about Netflix. In fact, there are more than two hundred million people like me who are subscribed to this amazing streaming service. I understand that a lot of people are actually educated about the stock market and know what is happening to Netflix stocks. But even if 1% of Netflix subscribers do not have that good an understanding of stocks, that would mean that upwards of 2 million people exist that would like to get a better idea of what happened to Netflix stock. This is what motivated me to write the article about the recent events pertaining to Netflix. Not only will I be covering the stock downfall that happened recently in 2022 but I will also later be giving examples of previous Netflix stock crashes. 

The Recent Netflix Stock Crash

If you ask anyone in the financial industry, they will tell you that the recent Netflix stock crash was incredibly scary for the company. This is because Netflix experienced a stock crash of 35% on the second-last Wednesday of April and proceeded to drop an additional 5% the very next day, Thursday! These were not the only drops in Netflix stock this year. There were many others. When we account for all the drops and the few rises in stock price, we come to the conclusion that Netflix lost as much as two-thirds of its value within this very year. 

There are many reasons behind these large drops. A major one of the causes is the constant loss of subscribers. We know this for a fact because, well, history. When Netflix announced that it lost as many as two hundred thousand subscribers, as much as 55 billion bucks worth of Netflix market value got erased. So, one question to ask is why there was such a big loss of subscriptions in the first place. The first answer that comes to our mind is Netflix’s exit from Russia which resulted in the loss of, at the very least, seven hundred thousand subscribers. Another reason for that is the increase in competition. Corporate giants like Amazon, Disney, and Apple all are backing up streaming services other than Netflix. Yet another reason for the decrease in subscribers is that the service is not gaining many new subscribers. After all, why should anyone pay for another subscription if they can just use the account of any one of the Netflix subscribers they know for free?! It is, indeed, hugely important for Netflix to rethink its payment model. Basically, if people watch Netflix, they should be paying for the streaming service as well!

If there is one thing we can learn from the recent Netflix stock crash that happened in April, it is that increases or decreases in the number of subscribers of a specific brand heavily impact its perceived worth in the market. 

Previous Netflix Stock Crashes

In the case that you are also worried like I was about Netflix completely stopping its operations after a valuation crash, something that may bring you some relief is knowing that Netflix faced crashes of a similar nature before and survived them. Some of these crashes are briefed below:

  • On the 20th of January, 2022. Netflix stocks crashed by a quarter (25.2%) of their total value after it reported its earnings from the 4th quarter of the previous year.
  • In October of 2018, Netflix stock dropped by as much as 19%. In July of the same year, shares had already dropped by fourteen percent in one go. 

Wrapping Up

All the above information was to show you what exactly is happening to Netflix right now. I hope this article accomplished that. It is now up to you to form your own opinion about the topic!

Related Articles

Back to top button