Netflix on rocky stock market road
LOS ANGELES — It’s looking like another bad summer for Netflix.
One year after a sudden price increase and a bungled plan to establish a new DVD brand, the subscription video company’s stock is again plummeting.
It fell 25 percent on Wednesday, closing at $60.28. This time the culprit is investors’ concern that domestic growth is slowing while management is moving too fast to expand overseas.
Wednesday’s drop took Netflix shares to their lowest point since early 2010.
In a letter to shareholders, Chief Executive Reed Hastings and Chief Financial Officer David Wells disclosed that Netflix will have to hit the high end of its third-quarter guidance to reach a previously stated goal of 7 million new domestic streaming video subscribers in 2010.
In reports to clients Wednesday, many analysts expressed skepticism about this goal. In addition, those analysts were not optimistic about Netflix’s plan to plow most of the profits from its domestic business into international expansion over the next several years, which will keep it around break-even on a global basis.