Netflix Inc (NASDAQ:NFLX) subscriber base had been steadily increasing for more than a decade, until the company announced first-quarter earnings on Tuesday, revealing it had lost 200,000 users despite expecting to acquire 2.5 million.
“Our revenue growth has slowed considerably,” Netflix informed its stockholders.
The following factors contributed to the company's revenue loss:
- It’s decision to stop streaming in Russia
- Password sharing
- Hiking prices in some countries
- Increased competition
Markets reacted negatively to the announcement, pushing the stock down 36% and reducing the company's value by more than $50 billion according to Benzinga Pro.
Also Read: One Analyst Is Upgrading Netflix Shares Despite The Subscriber Loss: Here's Why
Famous investors like Bill Ackman of Pershing Square Management, who stocked up on Netflix shares at the end of January when it was trading in the $351 to $409 area, can attest to the billions of losses piled up.
While we don't have the exact cost basis of each investor's Netflix position, we can approximate their percentage losses by looking at when the shares were purchased.
Baillie Gifford & Co's latest declared stake in Netflix was about 7.82 million shares valued at about $4.7 billion, representing an average cost of $610. This is a loss of 63% at current prices.
Netflix CEO Reed Hastings owns more than 5.1 million shares in the company, of which 51,440 were purchased in late January at an average cost of $388 when the stock was trading in the $379 to $393 area. Hastings is currently down 42% on those shares, although they account for only one percent of his NFLX stock holdings. His overall stake saw a drop of nearly $650 million at one point on Wednesday as the stock dropped by over $125.
Ackman's Pershing Square bought 3.1 million Netflix shares for $1.1 billion in late January, indicating an average cost of $354. Today, the value of the hedge fund's stake in the streaming behemoth has plunged by around $407 million, a decline of more than 37%.
NFLX Price action: Netflix shares slumped 35% over Wednesday’s trading session to close at $226.19.
