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article imageNetflix experiences decline at the first quarter closing

By Nicole Byerly     Apr 24, 2012 in Business
After hours of investment trading, Netflix shows a plunge in stocks of nearly 17 percent. The movie streaming and rental company went from a $101.84 opening to a NASDAQ closing of $84.85.
Netflix reported a first-quarter loss that was not as significant as predicted by Wall Street, however they warned that the domestic second-quarter streaming addition would most likely fall below the levels experienced during the second-quarter of 2010.
These projections were met with a 17 percent decline in stock trading as NASDAQ shows Netflix went from a $101.84 per stock opening down to an $84.85 closing after hours of trading. Netflix must continue to add customers to the instant-streaming business in order for the company to be successful in the future and increase sales and revenues.
Netflix is currently pushing forward on a predominant market of online streaming and moving away steadily from the previous push of mailing DVDs to subscribers. As Netflix continues to write bigger checks for new movies and television shows, the drive to increase clientele has become more important than ever.
CEO Reed Hastings and CFO David Wells addressed shareholders in a letter stating that the changes were "nothing new or particularly concerning" and the current customer’s viewings are demonstrating healthy patterns.
In 2011, Netflix rose the costs associated with customers who choose the online streaming option combined with renting one DVD at a time. The price increased from around $8 to $17 as they combined the prices associated with the online streaming option and the individual program for renting one DVD at a time. After the spike in price, Netflix lost over 800,000 customers in the United States. During the last three months of the year, they were able to gain back roughly 610,000 customers.
For the first quarter, Netflix posted revenue of $870 million, up 21 percent from a year earlier. The company had a net loss of $4.6 million or 8 cents per share in the quarter, versus a net profit of $60.2 million a year earlier. Netflix added 1.7 million streaming customers in the United States during the first quarter for a total of 23.4 million subscribers. The number of DVD subscribers fell by roughly 1.1 million to a total of 10.1 million.
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