After having revealed that it lost about 800,000 subscribers during the third quarter of the current year, Netflix’s shares plummeted by 35% early this week which is also believed to be driven by the high costs associated with its international expansion plans.
Of the $822 million revenue the company realized during the quarter, only $62 million is the net profit margin or a measly $1.16 a share. The stock was eventually downgraded when it settled at $77.37 from its all-time-high this year at $300 in mid-July. Although the subscriber based started to swell at the start of the year, the company’s move to spin-off its DVDs-by-mail operations and charging separately each services resulting to a price hike triggered the mass withdrawals.
The company’s subscribers shrank from 24.6 million on May to 23.8 million as of September 30. For the rest of the year, NetFlix expects its subscriber base to be at 20 – 21.5 million for streaming and 11.3 million for DVD-by-mail. It has formally announced its intention to expand the streaming video service into the UK and Ireland which analysts believed will cause tremendous pressure upon the company’s finances. NetFlix’s implementation of changes in its operations is intended to make entertainment a snap. This, however, angered subscribers resulting to the mass exodus.