Why Is the Netflix Stock Down?

Peter Kafka says the Netflix stock is down 40% over the last year because Wall Street is not buying the pitch to watch revenue per subscriber instead of subscriber growth.

Netflix has been telling investors not to worry so much about subscriber numbers and to look at how much each subscriber pays, including through ads sold to some of them, so the company can make more money from each subscriber even when the count is barely growing. Rishi Rajagopalan asks whether the drop is just the failed Warner deal, and notes that Netflix is still profitable and revenue is still growing. Peter Kafka says the market told Netflix not to spend $80 billion to buy Warner Brothers and HBO, and that wanting to spend that money may mean Netflix has a problem. Netflix made its name on its own shows, including Stranger Things and Squid Game, and had never done an acquisition of any real size. He says the stock was already sliding before Netflix bid and temporarily won that package, so he does not know how much of the drop the deal explains.