Netflix Drops $50 Billion In Value Overnight After Falling Short Of Subscriber Goals

Even before the world was forced to stay home more than ever, Netflix was a major part of the cultural zeitgeist. For better or for worse, the phrase and the associated action of "Netflix and chill" has basically replaced "dinner and a movie." Netflix as a noun, meaning a subscription-based site where one can find a nearly endless amount of movies and shows, is ingrained in our vernacular just as Kleenex, Coke, and Q-Tip has replaced tissue, soda, and cotton swab for many people.

However, that kind of success isn't enough for the company's stock holders and the fat cats of Wall Street. After Netflix fell short of the projected subscriber goals in its fourth quarter earnings last week, the company's market cap dropped around $50 billion in value overnight.

Close But No Cigar

According to The Wrap, this is the worst 24-hour period on the stock market for Netflix since July 2012. On Thursday, Netflix revealed that it very nearly hit the self-imposed goal of accumulating 222 million subscribers in 2021. Since almost crossing the finish line isn't the same as winning the race, investors panicked so much that the company's stock prices dropped 21.8%, which adds up to a loss of more than $100 per share from end of day Thursday to end of day Friday. The majority of these losses came during after-hours trading, so it's possible that the streamer could be pulling in even less than recorded on the last business day.

As bad as that all looked last week, the panic from investors probably took into account the less than stellar projections from the first quarter of 2022 as well. Forecasts currently show only an estimated 2.5 million new subscribers so far. Considering that numbers were closer to 4 million new subs around the same time last year, it's easy to see why those invested in the company are in panic mode. For example, Netflix Co-CEO Reed Hastings holds over 7888,000 shares in the company. By the end of last week, he lost about $95 million due to the drop. However, it's a little hard to feel bad for him when he's still on track to "earn" $34 million this year. Meanwhile, I can't find a dentist that will accept my insurance so I can get a crown on one of my back teeth.

It'll be interesting to see what kind of moves Netflix makes this year to try and recuperate these losses while competing with other streamers like Disney+, Apple TV+, HBO Max, and Peacock. In a perfect world, they might invest more money into creative, original programming or exciting new movies. But in reality, I'll bet that we see more beloved shows like "GLOW" get the ax prematurely.