Professor Elam

Accounting & Investing Info for San Antonio A & M

about

Another Day, Another drop for NFLX

October 25, 2011

Tuesday Oct 25, 2011

Our observations earlier this summer that Netflix was a high flier and due for a pullback have some spectacularly true.

That dot at 78.10 is the latest quote. It seem NFLX is going to lose money for a while. The market has reacted accordinlgy. In three months the stock haas lost more than 2/3 of its value at 300. This explains the difficulty of making money in high tech, things change fast. NFLX changed its pricing structure causing a bolt in customers. The Qwicster plan was scrapped in three weeks, the idea of splitting movie rentals form direct streaming. This also points up the importance of predictable earnings, another reason to study accounting on how earnings are calculated.

Well the damage is done now. Be careful changing your current business model, the customers can, as Sam Walton observed, fire all of you. Hello New Coke…..

Posted in Financial Acct

7 responses to “Another Day, Another drop for NFLX”

Phillip Garcia

October 25, 2011

I saw on the news today that NFLX is losing about 800,000 customers and there is probably more to come. NFLX was not thinking of its customers. Stocks are important, but it is NFLX’s customers who are the ones that buy the service of renting movies.

LikeLike

Reply
Luis Martinez

October 26, 2011

It’ll be interesting to see what Netflix does next. Will it try to ride the storm and hope for bigger profit margins as a result of the change? Or will it try to woo those disgruntled customers back by changing back to the old model? I think the damage is too deep and it seems their base of customers are a younger generation ready to “vote with their pocketbook.”

LikeLike

Reply
Shawn

October 26, 2011

Well with the blockbuster doing like netflix would they succeed because there are adding games to there streaming and could be more successful, they can control the market if they offer more products

LikeLike

Reply
Valentin Tristan Jr.

October 26, 2011

Nothing is going to change for Netfilx right now as far as the pricing is concern. I have never seen a business give back money or take back higher prices. Netflix problem was, they were high on their own success. Netflix could have gotten a 60%, just like they did right now. The only thing is Netflix should have done it in three stages of 20% per year. By doing it all 60% at one time, it made them look like they were gouging their customers. On spliting the company, maybe they should have split it in between some price increase during the year but keep the one bill fromat, then later try to slit it in two company. Netflix should have taken baby steps instead of trying to shove everthing at once down their customer throat.

LikeLike

Reply
Javier Carvajal

October 26, 2011

Like you said in class, this is an overpriced stock. I think this is where it needs to be. Plus I think netflix’s stock is the least of their worries. They are losing customers left and right. Clearly they need to consider their price hike.

LikeLike

Reply
Laura Dorantes

October 27, 2011

Netflix has to do something real soon so they can go up again and gain the customer that turn their back to them as soon as possible. They know they need them so that they can start going up again.

LikeLike

Reply
Yesenia Banuelos

November 7, 2011

This dramatic change that happen to Netflixs is going to bring them down. Netflix needs to start attracting more costumer and the only way they can do that is by lowering their prices.

LikeLike

Reply