A little more than one year ago, on July 12, 2011, Netflix CEO Reed Hastings announced a new pricing model separating its streaming service from DVD-rentals. The combined subscription that had previously cost $9.99 was split into two separate plans at $7.99 each. The pricing reform was followed by public outcry over what was effectively a 60% price hike for subscribers of both services.
Hastings insisted that the change was necessary to ensure his company’s future success, but Netflix’s stock began tumbling nonetheless. To make things worse, Netflix announced in September that it would spin-off its DVD business into a newly-formed company called Qwikster, only to discard the plan a few weeks later. This episode did not fare well with customers and investors alike and by the end of the year Netflix’s share price was down more than 70%.
The company slowly began rebuilding trust in 2012, but its stock remained highly volatile. After Netflix had announced disappointing user growth and lower then expected guidance last week, the company’s stock took another hit. On July 26, Netflix’s stock hit its 52-week low, closing at $57.01. Will Netflix go even further down in the future or has the stock finally hit rock bottom?