Netflix stock drops, analysts question angry subscriber cancellations

While many Netflix members fume over the recently announced price increase due to take effect in September and promise they will cancel their subscriptions, the company’s stock has bounced up and down. What’s good for the shareholder isn’t always good for the customer says a report this week, illustrating that the disparate goals of keeping prices affordable for discerning consumers and satisfying those who expect to profit from their investments don’t mix.

Netflix stock drops, analysts question angry subscriber cancellations

According to the International Business Times, Netflix stocks fell 3 percent to $9.50/share on Monday – a slight drop after shares actually rose following Netflix’s controversial rate hike last week. Unsurprisingly, shareholders like it when businesses attempt to make them more money.

Netflix subscribers offered a far different reaction. Not one day after the official Netflix blog outlined the service and price changes, the normally quiet site got loud. Members filled the section to its 5,000 comment limit with cancellation threats and no small amount of vitriol.

However, at least one analyst – Michael Pachter of Wedbush Securities – has questioned if such a negative outcry will produce tangible results; it’s one thing to threaten to cut off a service, and another to actually do it.

Of course, stock drops on the heels of controversy isn’t shocking. Netflix shareholders shouldered a six percent decline in March following news that Facebook would begin streaming a handful of Warner Bros. movies – including “The Dark Knight.” Prior to that deal, some speculated the company’s impressive stock growth streak was ended by Amazon’s announcement of its own streaming service, which is available as an added bonus for Amazon Prime subscribers. In 2010, shares fell nine percent in response to Netflix’s inability to meet or exceed sky-high revenue expectations.

Netflix confirmed this month that it plans to bring instant streaming service to 43 Latin American and Caribbean countries in late 2011. Rumors persist about a 2012 European launch which would further expand the company’s current coverage.