Netflix shares plunge as competition grows

After the numbers came out, Netflix's stock price plunged by 20%, deepening a steep decline over the past two months.

It was a challenging year for Netflix as it reveled in eye-popping gains during the 2020 pandemic lock down that drove homebound people to its service.

Other services backed by deep-pocketed rivals such as Walt Disney Co. and Apple have been making inroads in the last few years, and a lot of other networks are wading into video streaming in an attempt to grab eyeballs and a piece of household budgets. The escalating competition was one of the reasons Netflix decided to expand into video games last year.

Third Bridge analyst Joe McCormack said that the backdrop for Netflix seems to have been set with a theme of competition abound in the 2022 period.

While acknowledging the competition is having a marginal effect on its growth in i ts quarterly shareholder letter, Netflix emphasized that its service is still thriving in every country where it is available.

The uncertainty caused by the ebb and flow of the Pandemic has made it harder to gauge future growth, according to Netflix executives in a Thursday conference call.

Co-CEO Ted Sarandos said that COVID has created a lot of bumpiness. Reed Hastings, the company's other co-CEO, expressed some frustration before saying, For now, we are just like staying calm and trying to figure it out. Netflix earned $607 million, or $1.33 per share, in the fourth quarter, a 12% increase from the same time in the previous year. Revenue went up by 16% to $7.7 billion in the fourth quarter.

Investors are worried that Netflix may be nearing its peak in popularity. The stock price of Netflix has plummeted by more than 40% from its peak of $700 reached in mid-November due to concerns.