Why NFLX’s Market Cap Plunged $12 Billion in 3 Days

Netflix (NLFX) stock plunged by more than 6 percent within hours after the U.S. stock market opened, wiping out $12 billion from the market capitalization of the company in merely three days.

Netflix stock is down substantially f.rom its record high, demonstrating a poor year-to-date growth. | Source: Yahoo Finance

The major factors behind the steep downward trend of Netflix stock are said to be increasing competition in the U.S. streaming market with the entrance of Disney and Apple coupled with the lackluster Q2 performance of Netflix that intensified the fears of strategists.

Netflix CEO Reed Hastings said that a “whole new world” will begin for the streaming industry beginning November with Disney+ and Apple TV+ launching in the U.S., but he believes the company will be able to dominate the bingeable content market.

“While we’ve been competing with many people in the last decade, it’s a whole new world starting in November…between Apple launching and Disney launching, and of course Amazon’s ramping up. It’ll be tough competition. Direct-to-consumer [customers] will have a lot of choice,” noted Hastings.

The company has said that it will produce more than 50 shows for the U.K. market this year with a budget of more than $500 million, aggressively pushing for expansion amidst fears of rising competition.

High-profile analysts predict bigger bloodbath for Netflix stock

As investors like Todd Juenger, an analyst at Bernstein, target $230 as the bottom of Netflix stock, investors have noticeably shifted their stance towards the dominant streaming service provider since its Q2 performance.

In the second quarter of 2019, Netflix recorded a decline in subscribers in the critical U.S. market for the first time since 2011.

The company added 2.7 million subscribers in the international market but substantially fell behind its guidance of 5 million.

At the time, Netflix said:

“Our missed forecast was across all regions, but slightly more so in…

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