The situation for Netflix is ​​getting more and more complicated. This time, the company’s shares fell 35.12% last Wednesday (20) to close at $226.19. According to experts, the main reason for this drop is due to the announcement that the platform plans to create an ad-supported subscription plan.

“Short-term visibility is limited… and there’s nothing to look forward to in the coming months other than a much lower new share price.” said Doug Anmuth, an analyst at JPMorgan, who also halved his net subscriber growth estimate to 8 million.

“People buy growing companies because they think their cash flow will grow, so they pay upfront to wait for it. When such stocks go down, people who want to go up quickly retreat.“, he explained.

Billionaire investor William Ekman even made a $1.1 billion bet on Netflix, closing with a loss of more than $400 million. The fund sold 3.1 million shares it bought just three months ago when Netflix shares fell 35% to $226.19.

In January, an investor pumped over $1 billion into the streaming service, just days after a disappointing subscription outlook slashed its share price. Now, a second wave of negative news from subscribers has prompted the fund manager to turn his back on the company he praised just a few weeks ago.

“While the Netflix business is fundamentally easy to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a fair degree of certainty.“Ackman wrote.

Damage rates

After losing over 200,000 customers, Netflix co-CEO Reed Hastings said the streamer would look into launching subscription ads for “next year or two“, although he claims to be against it.

“Anyone who has followed Netflix knows that I was against the complexity of the ads and a big fan of the simplicity of the subscription. But as much of a fan of it as I am, I’m more of a consumer choice advocate, and letting consumers who like lower prices and are tolerant of ads get what they want makes a lot of sense. .Hastings said.Think of us as quite ready to offer even lower prices with advertising as a consumer choice.“, he added.

In addition, he admitted that he intends to reduce content costs in the next two years.

“We will reduce our spending on both content and non-content. We are trying to be smart and prudent in terms of reducing some of these costs to reflect the realities of business revenue.“, he decided.

However, it was these measures that further alienated investors, causing the company’s stock to plummet on the 20th.

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Source: Reuters, Reuters.