Netflix's value has been reduced by $50 billion as subscribers quit the service
Written byTimes Magazine
Netflix shares have dropped by 35% after the company revealed a sharp drop in subscribers and warned that millions more are on their way out of the streaming service. It wiped more than $50 billion off the firm's market value, with experts warning that it would be difficult to get back on track.
Netflix faces fierce competition from streaming rivals, but it has also suffered due to price increases and its exit from Russia. However, some have questioned the company's plans to boost growth, including introducing a free ad-supported service.
It also intends to crack down on password sharing, estimating that over 100 million non-paying households use the service in this manner. In a sign of unease, one of America's most well-known investors, William Ackman, sold his $1.1 billion investment in Netflix on Wednesday, taking a more than $400 million loss.
Pershing Square Capital Management, his hedge fund, had purchased the shares just three months before.
Mr. Ackman stated in a brief statement that while Netflix's plans to change its business model made sense, investing in the company felt too risky.
"While Netflix's business is fundamentally simple to understand, we have lost confidence in our ability to predict the company's prospects with a sufficient degree of certainty in light of recent events," he wrote.
After a period of hyperbolic expansion during the pandemic, some analysts have warned that the streaming behemoth has run out of easy ways to expand.
Squeezed consumers are cutting back on streaming services to save money, while others believe there is too much content to choose from in an onslaught of competition from rivals such as Disney and Amazon.
"Netflix's larger problem, like the rest of the sector, is that consumers don't have unlimited funds, and one or two subscriptions are usually enough," said Michael Hewson, an analyst at CMC Markets.
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