April 24 - Investors are giving Netflix bad reviews after they warned of slower subscriber growth and reported their first loss in seven years. Bobbi Rebell reports.
The latest plot twist is frightful for Netflix shareholders. The video rental company says its key U.S. subscriber growth is slowing this quarter- and will be worse than the rate a year ago. Adding customers to its instant streaming business is everything to Netflix- without more paying customers- it can't write bigger checks for movies and TV shows- and without that premium content- well- there go the new customers. Sterne Agee's Arvind Bhatia has a neutral rating on the stock: SOUNDBITE: ARVIND BHATIA, SENIOR RESEARCH, ANALYST, STERNE AGEE (ENGLISH) SAYING: "The studios are in the driver's seat and therefore what you have to expect is that the content costs are going to continue to increase and that's why the subscriber growth trajectory is so critical to the stock." Monday after the closing bell, Netflix reported its first loss in 7 years- though the quarter was not as bad as Wall Street had expected. The stock price was hit hard - falling sharply on Tuesday. Netflix has been transitioning to streaming media and expanding around the world. And though it faces growing competition from rivals like Amazon, Comcast, Hulu and Apple TV- it still has the advantage of being first. SOUNDBITE: ARVIND BHATIA, SENIOR RESEARCH ANALYST, STERNE AGEE (ENGLISH) SAYING: "They have significantly more content than many of its competitors. And Amazon Prime, you know, versus those guys, I think Netflix has probably 5 times more content. Versus Hulu they have significantly more content. Hulu Plus at 8 bucks a month, you still have to watch the ads. Netflix you don't and so I think that Netflix is in a good position." DVD rentals continue to shrink. They lost over a million subscribers last quarter, but Netflix says it has no plans to sell the service, which it split from the streaming business last year prompting a major customer backlash, it is still trying to recover from. Bobbi Rebell, Reuters.