After projecting to its investors a slowdown in growth of U.S. streaming customers, Netflix Inc., the world's largest video-subscription service, plunged to a new six-month low Tuesday, as shares for tumbled 14 percent to $87.89 on April 24.
The loss for Netflix (NFLX) is the company's biggest intraday decline since Oct. 25, when they reported a loss in U.S. subscribers for the third quarter.
The stock backed off 66 percent from its all-time closing high of $298.73 set in July 2011.
The retreat follows a negative report posted on the company's website on April 23 that informed its investors of the stock finishing the Q2 with 23.6 million to 24.2 million domestic online subscribers.
Despite the numbers being a high from 23.4 million on March 31, the report hints only 200,000 to 800,000 user increases - a decrease from 1.74 million in the Q1.
They guided to subscriber growth dropping a ton quarter- over-quarter, and some people think as soon as growth stops, this thing's over, Michael Pachter, a Wedbush Securities Inc. analyst, told Bloomberg News.
Although Netflix posted a first-quarter net loss of $4.58 million, or 8 cents a share, the decline was smaller than the $9 million to $27 million loss the company predicted in January.
The future doesn't look so bad for the company though, as overseas streaming subscribers jumped to nearly 3.1 million, up 1.2 million from last quarter. But the number of U.S. DVD subscribers fell to about 10.1 million, down from almost 11.2 million in the fourth quarter.
This quarter may range from a loss of as much as $6 million, or 10 cents a share, to a profit of $8 million, or 14 cents, on sales of $873 million to $895 million, Netflix said.
Our domestic business is growing in profitability, and then we're investing that in more and more international expansion, Netflix CEO Reed Hastings said in an interview.
Netflix has tons of deals it's negotiating in the U.S. and abroad that could increase content costs in the next year, he said.
Hastings also discussed Netflix's foray into original content with Lilyhammer, a show starring The Sopranos actor Steven van Zandt that debuted earlier this year. The Kevin Spacey series House of Cards is also slated for 2012, and the cult favorite Arrested Development will be resuscitated on the streaming service early next year.
'Lilyhammer' was quite successful for the amount we spent on it, Hastings said. We feel really good about that as our first shot out.