Shares plummeting, Netflix a worthy acquisition, analyst says
Although the issues at Netflix are becoming extremely worrisome to shareholders, the company might still be a worthwhile acquisition target, Wedbush analyst Michael Pachter wrote in a note to investors today.
How bad are things? Just yesterday Netflix announced that during the third quarter of 2011, it lost 810,000 subscribers. Even worse, Netflix said that it expects that trend to continue, and by the first quarter of 2012, will report a net loss.
Although Netflix’s share price had been declining prior to that news, its shares are plummeting now. As of this writing, Netflix is trading at just $77.16, down more than 35 percent compared to yesterday’s closing price of $118.84. In the last three months alone, Netflix shares are down nearly 73 percent.
Here’s an idea Netflix - reverse or at least lessen the price increase you put into effect that started this whole downward spiral. People have lost faith in Netflix and it will take something radical (like a price drop) to stem the tide of negativity that is engulfing the company. A few licensing agreements with major studios wouldn’t hurt either. Adding more TV content doesn’t cut it. The name Netflix implies that this is a movie service, not another streaming TV service.