Image Credit: Forbes.com
If you owned stock in the once darling of Wall Street Netflix on the 24th of October, you were sitting on a $120/share stock. Today $79! Only 3 days removed from the announcement of the $.60 reduction in quarterly earnings per share price. And this does not take into account that the share price was over $300 in July of this year.
Earlier this summer Netflix made a catastrophic decision this past summer to raise prices. This caused around 800,000 members to flee and investors along with them.
This reduction in available cash flow with hurt the companies growth objectives as it tries to open overseas markets. Currently with around $366 million in cash and adjusting $200 million for debt leaves the company with only $166 million for outside investments. And with only $13.5 million in free cash flow in the 3rd quarter the company is going to have a hard time keeping up with content payments alone.
Only time will tell if Netflix can stop the customer bleeding and rebuild what they have already lost.