Netflix Inc. (NASDAQ:NFLX) shares plunged more than 37% today after horrible earnings news. What’s to blame? A disappointing fourth-quarter outlook and its disclosure that international expansion would prevent profitability in the first half of 2012. Then Wall Street analysts piled in to downgrade and poo-poo on the stock.
The company’s brand does not fit with its large/growing content obligations, analyst Tony Wible of Janney Capital Markets, stated. He downgraded the stock to sell from neutral, offering a grim view of the formerly well-positioned company. Needham & Co.’s Charlie Wolf backed up his underperform rating on the shares. He had expected Netflix to pass down to its customers the growing fees associated with content. According to Chief Executive Reed Hastings (during a conference call with analysts), Netflix (NASDAQ:NFLX) is seeing a second wave of cancellations due to the price increase. Wedbush Morgan’s Michael Pachter thinks that’s great news for competitor Coinstar (NASDAQ:CSTR). It might also resurrect chatter about Amazon (NASDAQ:AMZN) buying Netflix at a discount.
“Consumers were angrier than Netflix anticipated. In mid-September, it warned that it would generate about 1 million fewer subscribers than it expected when it gave its initial forecast in July. The shares plunged 19% on Sept. 15, the day of that warning,” according to MarketWatch.
Don’t Miss: Netflix Expects Losses to Continue in 2012.