Netflix stock nosedives 19 percent after company ticks off customers
Netflix stock took a wallop after Netflix predicted 1 million US customers would cancel their subscriptions.
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Then they stirred a bee's nest. In July, Netflix announced that starting September 1, they would be changing their price structure. The net result many subscribers saw was a $6 increase in monthly fees without any improvement in service. The Twittersphere went wild and Netflix's Facebook page started filling with comments.Skip to next paragraph
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Then, on the day the new price plan took effect, Starz, Netflix's most valuable source of new movies, surprised everybody by announcing it would be cutting ties with them. Starz content is some of the most popular available to users and accounts for 8 percent of the streaming movies on Netflix. Subscribers saw it as a decline in service and started jumping ship.
Though Wall Street had initially embraced the rate hike in July, Thursday's announcement sent shares down 18.9 percent to $169.25.
While Netflix Inc. still believes the new pricing structure was the right move, the Associated Press reports that Jefferies & Co. analyst Youssef H. Squali said "a combination of the recent price hike, a less favorable competitive environment, and aggressive international expansion raises the risk profile of the stock."
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