Why did Netflix stock drop? The reasons behind the 28% share plummet

Netflix shares have plummeted by 28% in the last five days, down to $366.42 from its might $508 on Thursday January 20, 2022.

Published Tue, Jan 25 2022 5:11 PM CST   |   Updated Sat, Mar 19 2022 3:46 PM CDT

Netflix shares have nose-dived in the past five days...and here's why.

Why did Netflix stock drop? The reasons behind the 28% share plummet 3232 | TweakTown.com

As of today, Tuesday January 25, Netflix shares dropped a new yearly low of $366.42 USD. This follows days of sharp drops and slow climbs that create erosion in the company's projected EPS.

Netflix's most recently Q4 report is the root cause of the dives. Despite announcing 221.8 million paid subscribers and a thunderous $29.7 billion in revenues and $5.1 billion in net income, the company disappointed investors in a number of key ways.

  1. Netflix missed its new subscriber target - Execs wanted subs to grow to 222.06 million, but missed the mark by ~200,000 consumers. That's about $2 million in revenue assuming a $9.99 base plan.
  2. Massive operating profit hit - Op. profit was down -83% to $392 million as Netflix spends more on securing and retaining content.
  3. Financing loss - Netflix reported a $1 billion loss in cash from financing as it re-payed $500 million in debt, bought $600 million in share repurchases, and paid $224 million to secure tax payments for equity awards.
  4. Lower cash position - The streamer's cash was reduced by $1 billion in 2021, totaling to $6 billion. Netflix had a cash position of $8 billion in 2020.
  5. Low subscriber growth target - Execs expect to add 2.5 million subscribers in Q1 2022. Netflix subscribers grew by 3.97 million in Q1 2021, and an astronomical 15.76 million in Q1 2020.

These are the main reasons behind Netflix's share slide.

Why did Netflix stock drop? The reasons behind the 28% share plummet 443 | TweakTown.com
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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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