Stock Market Reacts to Latest Move by Netflix

Oct 11, 2011  •  Post A Comment

Netflix appears to have lost whatever good will it once had on Wall Street, as the market reacted negatively to the latest move by the company.

Netflix shares fell 4.8% Monday after the company announced it would scrap its Qwikster plan, reports Deadline.com. The decline came on a day when the S&P 500 rose 3.4%, while media stocks saw a 4% gain, the story points out.

The company has lost almost 63% of its value since July. "The flip-flop seemed to reinforce concerns that CEO Reed Hastings has lost his sense of direction," the article notes.

Hastings irked customers three weeks ago by announcing a plan to separate its DVD-by-mail business, which it planned to rename Qwikster, from its video-streaming operations.

According to The Wall Street Journal, investors were as angry about the plan as subscribers.

Hastings joked on his Facebook page on Sept. 20 — two days after the first Qwikster announcement — that he was at a Wyoming retreat with 10 investors. "I think I might need a food taster. I can hardly blame them," he wrote, according to the Journal story.

One Comment

  1. A Couple things Netflix did not consider:
    1) Many older movies are not available for streaming.
    2) If kids want streaming & parents want DVDs (since the movies they want are only available that way, example: Blazing Saddles.), a 60% price increase was too much for many family budgets.
    3) Some people might like DVDs at home but streaming while on trips.
    4) Streaming only is not yet ready for prime time. Many parts of this country do not have access to high speed internet.
    Netflix had a great business model, but they got greedy and now are paying the price.

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