Netflix (Nasdaq: NFLX) had one of its worst days in a while, falling over 9% to well below the $600 threshold after getting on Wall Street’s bad side. In its first-quarter results, the content-streaming giant revealed it would no longer be sharing subscriber numbers with the world. That reversal, coupled with a disappointing Q2 revenue estimate, backfired on Netflix, which contributed to the tech-heavy Nasdaq’s 2% decline on the day. 

Investors paid no attention to the fact that Netflix beat on both the top and bottom lines and its success in combating password-sharing behavior among customers. Netflix, which has been winning over viewers with its original content, plans to pour $17 billion into content in 2024, which is likely to result in more subscriber growth. 

By holding its subscriber numbers close to the vest, Netflix is following in the footsteps of other Big Tech names, including Meta (Nasdaq: META) and Apple (Nasdaq: AAPL). But subscriber data is near and dear to hearts on Wall Street. By becoming less transparent, Netflix is looking to shift the focus away from quarterly subscribers despite having added 9.3 million of them in Q1, a 16% increase year-over-year. Nevertheless, paid subscriber results will go away in 2025. 

Tech Trouble

Today’s declines in Netflix stock are a drop in the bucket compared with recent performance. Shares have climbed over 70% higher in the past 12 months and aren’t trading too far from their 52-week high of $639. There could be room for upside. But technology stocks haven’t had a very good week, and investors aren’t in the mood for curveballs. The Nasdaq has fallen for six straight trading sessions.  

By the looks of Netflix stock today, you’d never know the company just reported impressive quarterly results. Revenue increased nearly 15% year-over-year to $9.37 billion, surpassing the company’s guidance. At $2.3 billion, net profit also exceeded expectations of just under $2 billion.  

But in addition to the subscriber rule debacle, all eyes were on Q2 revenue guidance, and Netflix missed the mark. 

Is Netflix a Sell in 2024? 

Netflix may have upset investors with its subscriber stunt, but it’s still a tech favorite, when tech is in favor. Fundamentally, Netflix is operating on all cylinders and just experienced a blowout quarter. But one Wall Street firm says investors shouldn’t ignore the fact that Netflix has decided to share less data. 

It could be an indication of slower subscriber growth up ahead, according to Canaccord Genuity analysts. They downgraded the stock to a “hold” rating from “buy” and lowered the price target from $720 to $585 amid “slower growth ahead.” Either way, it’s been a tough week for tech stocks, and Netflix’s timing couldn’t have been worse. 

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