April 20, 2022 premarket reports have investors and market watchers wondering why Netflix stock is plummeting. The company will be devalued approximately $40 billion if this drop holds when the market opens.

A +30% drop in Netflix stock came directly after the company released its first-quarter report for 2022. The streaming service lost 200,000 subscribers in the first three months of this year alone. 

This was a drastic difference from the 2.5 million subscriber increase they projected.

However, why this crash occurred is not something completely out of the left field. Here are the factors over the past year that played a role in Netflix’s stock decline. 

The market was already changing

During the pandemic, Netflix stock shares went up 86%. This is not a surprise. People were working and spending a majority of their time at home. 

As the world returns to work, things have changed. The company’s stock was already down 40% at the beginning of 2022 from its 2021 value. 

However, Netflix attributed additional reasons for their underperformance. 

Password sharing ruined Netflix stock?

When Netflix addressed the results of the first-quarter report, they cited global events, the economy, and password sharing among users. 

First, the representatives of the major entertainment company spoke about inflation

In a statement for CNN Business regarding the crash of Netflix stock, CMC Markets Chief Market Analyst Michael Hewson said: 

“Food and energy are people’s priorities right now, not watching ‘Stranger Things.'”

The Russian invasion of Ukraine was also brought up. Netflix pulled its service completely out of Russia upon the start of the war. As a result, this withdrawal lost them 700,000 subscribers. 

Finally, the prevalence of consumers sharing their passwords was noted as a concern. The company stated they had strategies they were going to implement to handle this without hindering user experience. 

This sounds like a lot of excuses at the end of the day. While all of these elements can affect a company, they had the potential to withstand it at their massive size.

At some point, the company was not delivering enough value to their customers to make a difference. 

Always overdeliver and be great,

Grant Cardone  

6 COMMENTS

  1. The importance of staying relevant in business can never be over rated Man.
    Things can change anytime and you have to be prepared with a lot of ideas and plans not a lot of excuses.
    Did they think people would remain at home forever due to covid?
    I hope they learnt from this and are working on innovative ideas else 2023 won’t be funny either.

  2. I think a part of their plummet may also have been partially due to their recent “woke” policies. I personally know a LOT of people who have cancelled their subscriptions because of it. Disney is taking a hit because of the same moronic course taken by upper management. Go Woke, Go Broke.

  3. Thanks for the little read grant but I pulled my investment back in 2020 as I seen Amazon fire stick sales go through the roof in the pandemic an new this was going to happen as they would take over the day to day streaming platforms

  4. On point as usual Mr. Cardone, Netflix limits certain movies and is not investing in newer released movies, Tv shows. Taking away value from it’s content. People are going elsewhere for newer released movies and Tv shows. Even if they pay extra. Which could be going to nextflix instead of other streaming platforms. Instead people just go hack a fire stick for free movies etc. Netflix could be dominating. Have one of your guys call Netflix and 10x ‘em up

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