These days, most companies are sensible enough not to announce a new strategy that shakes up its customers and investors so much that its stock plummets by 50%. Unfortunately for Netflix, it appears to have made such a mistake in July when it announced its new pricing strategy. In this case, the company's stock chart pretty much tells the story.
This is just ugly (the blue line shows the price at market close on Monday):
The peak you see was on July 13th, when the stock price hit $298.73. That was the day its pricing strategy was announced. As the market began to see the customer dismay the new pricing plan had triggered, investors began to
slowly quickly back away from the company. Its stock fell for the next month or so and then vacillated in the low- to mid-$200s for the month that followed.
Then investors learned that Netflix's customers' complaining wasn't just noise: many were canceling their subscriptions. Last Thursday, Netflix revised its third quarter subscriber estimate down by one million. The day before, its stock price closed at $208.71. It had dropped to $169.25 by the end of day on Thursday.
It continued to decline on Friday. Now today, we learn that Netflix will split in two: it will separate its streaming and DVD-by-mail businesses. At first, the market seemed vaguely hopeful about the plan, with its stock showing a modest gain in early trading. But as the day wore on, the market must have realized that the strategy raises some serious questions about the company's future. As Monday ended, its stock price closed at $143.75.