In just two days, the world of online streaming shook. Netflix lost almost 40 percent of its market cost in two days. It is hard to believe that a streaming platform like Netflix is struggling in the market. This huge dip in the market value of the Netflix stocks has made the investors question their buying, selling, and holding of the stocks.
On the 22nd of April 2022 that is Wednesday, the stocks dropped by 35 percent. On the following day, there was another drop of 5 percent. The streaming hub has dropped almost two-thirds of its total value this year. The market value has reached below the benchmark of $100 billion.
Another shocking revelation has created a dilemma for the investors, the platform lost 2 lakh of its subscribers at the beginning of the year. It is also predicted that in the next three months, this number will be increased to 2 million. However, the expert investors in the stock market are of a viewpoint that the investors should not sell their stocks and it will become profitable in the future.
What Are The Main Reasons Behind Netflix Stocks Plunge?
Sharp drops and slow hikes in the stocks of Netflix since the start of the year 2022 have led to the crumbling of the company. The share price dropped to USD 366.42 in January 2022. Poland in Central Europe had the maximum number of subscribers with almost 1.8 million users. But due to the churn rate, the expectations are that the number will lower. There is not a single reason but plenty of reasons for this massive drop.
Loss of Russian audiences
Due to the ongoing war between Russia and Ukraine, the streaming giant halted its services in the country Russia. This made a huge loss to the subscriber count of the platform. There was a drop of about 7 lakh paying subscribers. Although the company guarantees to add about half a million users to the list, the user count lost due to the termination of services in Russia is massive.
No Match between Expectations and Reality
The reports of the downfall in the number of active users should be an alarming sign for the streaming platform. The growth has gradually become slower. The streaming business is budding day by day. There are dynamic competitors of Netflix in the market. But on the other hand, the company is expecting a hike in the number of paying accounts from the upcoming quarter of the year, which is highly unlikely.
Resumption of the World after COVID-19 Pandemic
In the years 2020 and 2021, when the world was shut down, online platforms became a vital part of our routines. These platforms were the sole source of entertainment during the quarantine days. But after the world has resumed the essential activities, the high cost of subscriptions of the streaming platforms is curbed for the fulfillment of other needs. This has hit the streaming giant with a dual aspect that is increased investment in the capital as well as a huge drop in profits.
Dynamic Competition in the OTT-business
Netflix is not the only streaming platform that is used by audiences for streaming TV shows and movies. Apart from Netflix, many platforms like Amazon Prime Video, Apple, and Disney Plus Hotstar are running a profitable business. These streaming platforms provide subscriptions at a much more feasible price than Netflix. Reasonable subscription costs, a huge variety of shows, and movies from other streaming giants have also affected the active paying user count of Netflix.
Cracking down Password Sharing
The days of enjoying your friend’s Netflix account could be gone soon as the Netflix Team is changing some of its policies. The streaming pioneer will charge extra to the main account holders for the users outside their household. This new feature came into practice in Chile and Peru. As a result of this campaign, Netflix is bound to lose many of its subscribers.
Netflix needs to revise some of its policies to retain its share price otherwise the future of the streaming pioneer seems to be gloomy.
Also Read: Netflix Loses Subscribers for First Time in Last 10 Years
