Monday, October 24, 2011

Netflix: Overpromised, underperformed.

Netflix is falling getting hammered in after-hour trading, down over 1/4 of its closing day price.   Why?  Because they released their Q3-2011 results.



All this points to one and only one reason: Netflix issued revised projections just last month, but it still got it wrong by overpromising and underperforming...turns out, they lost 200K more subscribers than they projected just last month.

In retrospect, it seems that their change of heart earlier this month over Qwikster was a sign that they knew things were getting worse.  The nixing of Qwikster was a means for stemming the blood letting that would have gotten a lot worse if they went through with the separate subscription sites.

The real test will be the next quarter...does it resume growth, or has it flattened out somewhat, with pricing having overreached people's expectations / willingness?

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