Netflix is doing just fine, thank you
Headlining an article “Netflix is doing just fine, thank you”, and illustrating it with a chart showing the stock’s biggest drop in its history might be seen by some as provocative, but anybody who reads this page regularly will know I’m no clickbaiter.
The evidence is undeniable: Netflix shares were worth just over $690 at the end of October, and the day before yesterday they could be snapped up for just $188, drop of more than 70%, and that represents a very significant cut in the company’s valuation to $88 billion. At that price, it might even find itself the target of a hostile takeover.
In some ways, Netflix’s fall has parallels with Facebook’s, now Meta, in February: companies whose results tell the market that their growth has reached its limit, which, for companies whose valuation is based on their growth, is a serious problem. However, there are some very important differences between the two: firstly, Netflix has been impacted by the end of the pandemic and the lifting of lockdown, meaning its subscribers have less time to spend in front of a screen. For many who subscribed to Netflix during the pandemic to endure the endless hours of being at home, the return to normality has meant cutting back on spending and cancelling subscriptions for services that are no longer essential. But Facebook’s woes are of a very different order.
