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Netflix’s stock price has plunged by more than 38% in the past few days. In today’s trading session, the stock is down by over a percentage point, and it appears the bearish trend will continue throughout the session.
This recent decline marks Netflix’s biggest single-day percentage drop since October 15, 2005, when prices fell by over 41%. Netflix has faced significant struggles in 2022, with the stock down 62% year-to-date, including this latest decline. This isn’t the first time Netflix shares have tumbled this year; in January, the stock dropped by over 20% after the company announced it expected to add far fewer subscribers than the previous year.
However, the recent 35% drop on Wednesday, followed by continued declines, was unexpected. Investors anticipated slower subscription growth, but the announcement that Netflix lost hundreds of thousands of subscribers came as a shock. This led to panic selling, with over 100 million Netflix shares trading hands on Wednesday—a milestone not seen since 2015. Amid the chaos, some investors appeared to be buying the dip.
One reason for the steep drop in Netflix’s stock price is increased competition from other streaming platforms like Hulu and HBO, which offer cheaper, ad-supported options. Netflix has resisted offering such lower-priced options, which likely contributed to the recent subscriber losses. However, recent reports suggest the company is considering introducing an ad-supported tier.
In the coming days, Netflix’s stock price will likely be influenced more by fundamental factors than technical ones. The chart shows that prices have been in a bearish trend for some time. Since January, the stock has fallen by more than 62% and is likely to continue declining. My forecast for Netflix’s stock price suggests that the downward trend will persist, with a high likelihood of prices falling below $200 in the next few days.