Netflix Stock Plunges after Subscriber Losses

Netflix lost 200,000 subscribers in the first quarter of 2022, sending its stock down as much as 25% in after-hours trading. The company's share price has fallen more than 40% year to date.

The bad news did not end there. During its quarterly briefing, the company said it expects to lose another two million subscribers in the second quarter of 2022.

Netflix told investors in a letter that the pandemic clouded the picture of its true growth in 2020. It said underlying factors, like fierce competition from traditional media companies and widespread password sharing, were hurting its profitability.

The company also said that pulling out of Russia cost it 700,000 subscribers. Netflix said the only way out was to increase the quality of its programming and recommendations.

Analysts say the streaming giant will soon have to confront two issues it has been skirting for years: stopping rampant password sharing and introducing advertising to its platform.

What does this mean for me? 

One of the most valuable skills you will gain as your investment experience grows is learning how to make stock investment purchases based on deep knowledge of the companies in which you invest.

In the case of Netflix, the company clearly has some operational fixes to address before it can accelerate its earnings again. In this example, you could monitor future quarterly briefings to see how Netflix is addressing obvious operating-model flaws.