Netflix posted its biggest drop since July 2012 when analysts downgraded the streaming giant. streaming after he reported a prospect of subscriber additions that it did not meet Wall Street’s expectations.
The 22 percent pullback dragged shares of the market to the lowest level since April 2020. At least nine companies tracked by Bloomberg lowered their recommendation on the stock after Netflix forecast it would add sonly 2.5 million customers in the first quarter, compared to analyst expectations of 6.26 million additions.
The intensification of competition is becoming a “biggest problem now” for Netflix, Macquarie analyst Tim Nollen said in a report, downgrading the stock to a sell-equivalent rating. The subscriber outlook is disappointing and contributes to an uncertain outlook, he stressed.
Post-earnings declines aren’t new to Netflix investors, but Friday’s was the worst stock price reaction in a post-earnings session since its second-quarter 2012 report, according to data compiled by Netflix. Bloomberg.
Stocks have advanced on the day after earnings just twice in the last 12 quarters, excluding the most recent quarter, data compiled by Bloomberg.
In a move to the contrary, Benchmark updated its stance on Netflix, saying the liquidation seemed overblown. Netflix’s consensus rating, a gauge of its buy, hold and sell ratings index, now stands at 3.96 out of five, down from 4.27 earlier in the week.
With Friday’s drop, Netflix shares fell more than 30 percent in January, which is on track to be worst month for stocks since September 2011. Netflix shares have come under pressure in recent weeks along with tech stocks in general with the rise in Treasury yields.
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