A “Spectacular Collapse”: Netflix Loses 800,000 Subscribers, Stock Plunges 35%


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Mr. Gao co-found and became the CFO at Oxstones Capital Management. Mr. Gao currently serves as a director of Livedeal (Nasdaq: LIVE) and has served as a member of the Audit Committee of Livedeal since January 2012. Prior to establishing Oxstones Capital Management, from June 2008 until July 2010, Mr. Gao was a product owner at Procter and Gamble for its consolidation system and was responsible for the Procter and Gamble’s financial report consolidation process. From May 2007 to May 2008, Mr. Gao was a financial analyst at the Internal Revenue Service’s CFO division. Mr. Gao has a dual major Bachelor of Science degree in Computer Science and Economics from University of Maryland, and an M.B.A. specializing in finance and accounting from Georgetown University’s McDonough School of Business.

In 2010 Netflix CEO Reed Hastings was named Fortune Magazine’s Business Person of the Year. How quickly things change.

After a year riddled with missteps and misfortunes, Hastings has quickly fallen from grace with not only his customers, but his shareholders as well.

Netflix stock price dropped nearly 30% on Monday, falling below $100 per share for the first time in 14 months. In mid-day trading Tuesday the stock is down yet another 35% to $77.55. And that means, in the last five months the stock has lost more than 60% of its value.

Here’s why: Netflix announced Monday that it lost a shocking 800,000 customers last quarter after a couple of bungles in September. First, Hastings said the company was raising prices nearly 60%. Then a few days later he announced the company would split its DVD business from its streaming business.

But the story doesn’t end there. After days of outrage and criticism from all corners, including the media, Hastings backpedaled, apologized and said the company would remain as one. However, the price increases remain in place.

“We became a symbol of the evil, greedy corporation,” Hastings said Monday. “Then we faced a reputational hit that created significantly more cancellations than we anticipated.”

In the accompany video, The Daily Ticker’s Henry Blodget says its an absolutely “spectacular collapse”, one like he has never seen before. He explains why the company has fallen on such hard times.

For more on the saga see:

With All Respect To Reed Hastings, The Netflix-Qwikster Split Bad For Customers

Netflix Backtracks − Abruptly Cancels Plan To Spin Off DVD Business


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