Netflix sank this Friday morning, and the Nasdaq plummeted.
On Friday morning, following the release of Netflix’s fourth fiscal growth report, the company declined more than 20%. The Nasdaq stocks are still in the hot spot whereas the Dow futures and the S&P stocks remain positive. The Nasdaq composite stocks have suffered significant losses, with the index falling nearly 1%.
When Netflix’s fourth-quarter report was released last Thursday, the company’s stocks plunged by 11.82%. Today, Netflix’s share prices are worth $448.15 on the stock exchange market. The company logged a total of 8.3 million subscribers in the last fiscal. It beats expert analysis, but according to the company’s forecasts, it remains low. Moreover, as expected, the company generated total revenue of $7.71 billion from its subscribers in a three-month period. Surpassing all expectations, the earnings per share increased to $1.33 per share versus the $0.88 per share expected.
Yet, investors believe that the key growth for the company is still in its number of subscribers. At first glance, it seems that the company is outperforming other competitors such as Disney and Amazon. But after the release of the first-quarter outlook for 2022, investors have lower expectations. The company forecasts that it will have 2.5 million new users in the first quarter of 2022. For analysis, this feels beneath the expectations. Because the company recorded a total of 3.98 million subscribers in the first quarter of last year. So, investors now question Netflix’s ability to increase its subscriber numbers. Because, and for the time being, the company’s growth metrics are based on the number of subscribers.
Some experts forecast that Netflix won’t be able to keep up or increase its subscriber numbers. In fact, an interview with Yahoo Finance’s Santosh Rao addressed the problem. Santosh Roa noted that the high record and beating numbers are gone for the company. He also added that the company will have some real competition in terms of providing quality content. As a key metric of the Nasdaq composition, Netflix plays a significant role in the composition. If the company sinks, that will benefit no one, especially investors.
At this stage, it’s clear that technology stocks on the Nasdaq are getting lower and lower. Inventors are turning their heads away from volatile stocks these days. The Nasdaq fell by 1% this week.
Is Netflix sinking the stock market?
The Netflix results were very important to the Nasdaq composition, but they were disappointed, and this could lead to catastrophic results. On the other hand, Disney shares dropped by 4% and Ruku stocks sank by 5%. This is what affected the Nasdaq index, and probably this is just the start.
It looks like these names are struggling to increase their subscriber numbers, and this leaves us with two scenarios. First one, the Netflix report affected other companies’ results and subscribers, and that was considered a market problem. The second scenario, where there is no tendency whatsoever, and the Netflix problem is separate.
The Nasdaq Index is having one of its darkest times. The index has already dropped 10% from its all-time high. This leaves us with one question: will Netflix sink the Nasdaq stocks? Is there a pattern or trend here? And how will that affect traders and investors?