Netflix Takes A Drubbing; Stock Down Over 23 Percent After Earnings

Ouch: Yesterday’s after-hours action was rough for Netflix (NSDQ: NFLX), but today’s trading is even worse. With the trading day almost over, shares are down over 23 percent, as investors fret about what the company has in store. Last year, the company was dogged by competition issues, but with Blockbuster (NYSE: BBI) stepping back from the market, that’s no longer the issue. Instead it’s all the cash the company will spend to build out its digital delivery service. And to make matters worse, Netflix hasn’t articulated how it plans to recoup this investment. Right now, subscribers get streaming video for free, but the company indicated that will come to an end. Seeing as nobody really knows how to make money charging for online video, the returns on all this spending are rather unclear, indeed.

The good news: the slide only brings Netflix to back where it was in February, still well above its recent lows. It’s been one of the rare stocks to have performed well this year.

Comments have been disabled for this post