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Netflix shares plunge on fears over growth plans

Netflix shares plunged yesterday after a number of analysts warned that the company’s growth plans, particularly internationally, will see further losses.

The online streaming firm and DVD rental service saw shares drop by 6% from US$100 (€77) to US$93.96 after Wedbush Securities analyst Michael Pachter and Sterne Agee analyst Arvind Bhatia released notes on the company.

Bhatia claimed that Netflix’s international expansion in Canada, Latin America and the UK and Ireland will take longer than the company’s two year projection because of rising content costs and competition from companies including Amazon’s Lovefilm.

Meanwhile, Wedbush Securities’ Pachter criticised the company’s “growth at all costs business model” and echoed Bhatia’s claims that its international launches will take longer to break even. “While Netflix may increase subscribers in 2012, it is paying a steep price to do so,” Pachter added.

Tags: Netflix