Netflix Shares Plunged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Netflix (NAS: NFLX) have lost their streaming connection today and have fallen 16% as of this writing on a forecast decrease in subscribers.

So what: Oh, how the mighty have fallen. Netflix now expects to have 24 million subscribers at the end of the third quarter, down from a previous estimate of 25 million. What's more surprising is that the company's DVD-only subscription is expecting a paltry 2.2 million subscribers. Could this spell the end of Netflix's original business?

Now what: When a company like Netflix is on its high horse it seems like no one can beat it -- except itself. That was my argument when Netflix raised prices and I said it was time to unplug Netflix two months ago. Higher prices have forced customers to make choices about Netflix's value proposition and more people than expected think their dollars are better spent elsewhere.

I certainly don't see this as a good sign going forward and wouldn't want to be holding onto shares of Netflix as the stock continues to plummet. Are you holding onto your Netflix shares? Leave your comments on Netflix below.

Interested in more info on Netflix? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended buying shares of and buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.