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id: 290, Created by Stan Vick, Scout
Netflix (NFLX) Subscriber Loss Shock Case
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On April 19, 2022, Netflix released Q1 2022 results that shocked investors as it was the first time the streamer had reported a subscriber loss in more than a decade. According to CNBC "Netflix blamed increased competition, password sharing as well as inflation and the ongoing Russian invasion of Ukraine for the stagnant subscriber growth."
On this news, $NFLX plunged 35% and lost over $ 54 billion of its capitalization on April 20, 2022.
The conflict in Eastern Europe has indeed resulted in many Companies being required by sanctions or state requirements to leave their respective markets. At the same time, the situation for Netflix was completely different:
- Netflix was the beneficiary of working with Russian users, receiving from the proceeds, reducing the funds potentially available for the conflict in the country.
- The Company was one of the sources of Western propaganda, producing content of a liberal and democratic nature, which was more than ever welcome.
- Netflix received a significant share of the revenue and growth rates, the beneficiaries of which were primarily the shareholders of the Company.
- The departure of the Company did not in any way cause any damage and increased pressure on Russia, on the contrary, it increased the available funds, and additionally subjected its services to unlicensed access.
As a result, the decision of the Company's management:
- Hit the shareholders of Netflix, causing damage in excess of $54 billion in 1 day.
- The company indirectly provided support, in the opinion of the world community of the aggressor country, violating any principles of ESG.
Perhaps the Company's actions had the right intentions, but due to the fact of negligence or reckless actions, they ended up causing significant damage to both the national interests of their country and their shareholders
Breach of Fiduciary duty,
Shock Event Date
20 April 2022