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Ireland Netflix Great Britain

As UK move is announced, Netflix shares (once $300) crash to $77

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By Noel Young, Correspondent

October 25, 2011 | 3 min read

In tandem with yesterday's news that Netflix is moving into Britain and Ireland with a streaming video service next year, a crashing share price.

The Netflix logo

The company also revealed yesterday that it lost 800,000 subscribers in the third quarter after a price hike in its American service and expected lower fourth quarter profits. Shares in Netflix sank yesterday to $77.00, a 36% fall in 24 hours. In July the stock, then a market darling, peaked at over $300 .

The Wall Street Journal described it as "a dramatic tumble that has erased about $12 billion from the company's market value in just 104 days."

As Adweek put it, "If Netflix were a movie, you’d find it under the Horror section—for the moment, at least."

Since July, the company has made a series of blunders. First it jacked up prices for subscribers who wanted DVDs by mail and streaming. Then, when cancellations poured in, Netflix announced a separate service called Qwikster that would rent DVDs - but the price hike stayed .More complaints - and the Qwikster idea was axed.

On a call with investors on Monday, CEO Reed Hastings said that splitting video streaming and DVD rentals made sense "in theory" but he admitted that, "in hindsight, it is hard to justify. Qwikster became a symbol of Netflix not listening," he said.

Hastings accepted that the company had to rebuild goodwill among customers and investors. “The focus for us is in building back our reputation and brand strength,” he said.

On the plus side, revenue increased 49 percent year-over-year to $822 million, which beat analysts’ forecast of $811 million.

However,with the high costs of entry in the U.K. and Ireland, Netflix said it expected to be unprofitable for the first few quarters of next year.

Ireland Netflix Great Britain

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