Netflix Stock Sheds Over 32% After Surprise Subscriber Loss

Analysts and options traders alike are blasting NFLX today

Deputy Editor
Apr 20, 2022 at 10:16 AM
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FAANG concern Netflix Inc (NASDAQ:NFLX) stepped into the earnings confessional after yesterday's close, and reported first-quarter earnings of $3.53 -- easily beating the $2.89 consensus estimate on Wall Street. However, revenue of $7.87 billion fell short of forecasts, as the streaming giant lost 200,000 subscribers during the quarter, notching its first user loss in more than a decade after projecting an increase of 2.5 million subscribers. The company is planning to explore a cheaper ad-supported version, and vowed to crack down on password sharing.

In response, Netflix stock is cratering, last seen down 32.4% to trade at $235.56, and the subscriber losses are impacting other streaming services such as Roku (ROKU) and Walt Disney (DIS), which were last seen down 6.4% and 4.2%, respectively. Should they hold, today's losses will mark NFLX's biggest single-day percentage dip since October 2011. The equity also breached the $330 level, which kept its last two pullbacks in check, and is trading at an area not seen since December 2018.

The brokerage bunch was quick to pounce, with no less than 17 price-target cuts rolling in earlier today. Notably, Moffett Nathanson slashed its price objective by $105, moving down to $245. In addition, UBS and J.P. Morgan Securities downgraded NFLX to "neutral," while Stifel cut to "hold" and said "all good growth stories eventually come to an end."  

It should come as no surprise that options traders are targeting NFLX at an elevated clip. Already, 256,000 calls and 288,000 puts have crossed the tape, with total options volume running at 28 times the intraday average, and in the highest percentile of its 52-week range. Most popular is the weekly 4/22 200-strike put, followed by the 190-strike put in the same series, with new positions being bought to open at both.


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