The crisis on Netflix is unstoppable. As the number of subscribers has declined and stock prices have plunged, employees are being laid off one after another to seek self-rescue measures, but it is not easy to break through.
Netflix crisis erupted after the announcement of paid members in the first quarter of April. This is because the number of paid members decreased for the first time in 11 years. Stock prices plunged as soon as they announced that their membership in the first quarter was 200,000 fewer than the previous quarter.
Netflix recorded a market capitalization of more than $300 billion in October last year, but its current market capitalization has shrunk to about $86.7 billion. This year alone, stock prices plunged about 70 percent.
In the meantime, it has been reported that Netflix has been treated as a “value stock” in the U.S. stock market as a “growth stock.”
Netflix, which was included in the Russell 1000 Growth Index, is scheduled to be included in the Russell 1000 Value Index, the Wall Street Journal (WSJ) reported on the 23rd (local time).
The Russell 1000 Value Index is an index filled with stocks with relatively low PBR and low growth prospects.
Netflix, which is in crisis, has laid off an additional 300 employees due to cost savings. This is the second round of job cuts in a month following the layoffs of 150 full-time employees a month ago. Layoff employees account for 4% of all employees.
Netflix released a statement on the same day, saying, “We continue to invest in our business, but we have started to adjust our workforce as costs increase in line with slowing sales growth.”
The outlook for the future is not bright. CNBC, a U.S. economic media outlet, pointed out, “OTT companies seemed to follow a simple formula of success that if they increase subscribers, stock prices rise, but Netflix’s stock price plunge changed everything.”
In addition, “Expectations for the OTT market itself are still alive, but it is unclear what level of profitability OTT companies will show in the future and which companies will dominate the market,” the media analyzed.