Streaming Stocks Alert: Why Are NFLX, DIS, PARA, WBD, ROKU Stocks Down Today?

Several streaming stocks are sinking in morning trading after Netflix (NASDAQ:NFLX) reported that its subscriber total had dropped in the first quarter. Specifically, Netflix’s subscriber base fell by 200,000 in Q1, making it the first quarter in more than 10 years in which the company’s net customer total declined. Analysts previously had estimated that Netflix added 2.5 million paid customers in the quarter.

A close-up shot of a hand holding a TV remote with a blurred screen in the background.
Source: Shutterstock

NFLX stock is tumbling 31% to $240 on the news, setting a new 52-week low for shares.

Among the other streaming stocks dropping this morning are Roku (NASDAQ:ROKU), which is sliding 4%, Disney (NYSE:DIS), which is giving back 4.2%, and Paramount (NASDAQ:PARA), retreating 7.6%. Also down is Warner Bros. Discovery (NASDAQ:WBD), which is dropping 5.4%. The latter company was recently created from a merger between Warner Bros. and Discovery after AT&T (NYSE:T) spun off Warner Bros.

What Is Happening With Streaming Stocks

Netflix predicted that its subscriber base would drop by an additional 2 million in Q2. The company indicated that it may soon take steps to prevent its customers from sharing their Netflix passwords with other consumers who do not subscribe to the service. Such a move would likely increase Netflix’s subscriber base.

CEO Reed Hastings also said that Netflix was “open” to creating a cheaper subscription option “with advertising.”

On the top line, Netflix’s Q1 revenue came in at $7.87 billion, just $70 million below analysts’ average estimate. On a positive note, the company reported earnings per share of $3.53, well above the mean estimate of $2.91. Moreover, it generated net cash from operations of $923 million.

Responding to the results, JPMorgan Chase lowered its rating on the shares to “neutral” and slashed its price target on NFLX stock to $300 from $605. The company conceded that it was dealing with “relatively high household penetration when including account sharing, increased competition, & COVID pull-forward giving way to fundamental weakness,” JPMorgan reported.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC