Netflix Stock Plunges After 800,000 Members Quit

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Source: Ned Potter / ABC News

Are you still a Netflix subscriber? Didn’t think so. If you were angry enough at the company to cancel your membership, it now says there are 810,000 people just like you.

Do you own Netflix stock? If you haven’t sold it, you’ve missed your chance; the stock — already down 60 percent since the company announced a disastrous price hike in July, dropped another 35 percent this morning. Netflix stock briefly hit $300 per share on July 13; today it dropped below $75.

Though it still does have 23 million members, Netflix managed to make the kind of mistake so massive that people will study it at business schools for generations to come. The company had a remarkably successful movies-by-mail service, but decided it would be left behind if it kept sending DVDs to people instead of streaming them online. So it tried to spin off its mail service to a new business called Qwikster. Customers revolted.

“They’re making a transition from a ‘momentum stock,’ where you can do no wrong,” said Vasily Karasyov, an analyst at Susquehanna Financial. “When the momentum’s gone, you see the complete annihilation of the share value. That’s why they call it a momentum stock.”

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