Why did Netflix stock plummet today? It's all about the users
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Netflix (NASDAQ:NFLX) was a $229 billion company on Thursday - but that was one rough earnings report ago.
Today it's more than $50 billion lighter, and investors looking into the headline financials would be hard pressed to explain a 22% drop - the company's worst day since 2012.

Earnings per share on a GAAP basis hit $1.33, $0.50 better than expected, and revenue growth of more than 16% was in line with analyst expectations. But adding just 8.28 million net subscribers when the company had forecast 8.5 million (and the Street expected only 8.32 million) - and forecasting just 2.5 million net adds this quarter - weighed most prominently in investors' minds.
In the company's earnings call, Netflix's executives said that while user growth clearly wasn't what it forecast, the business was still plenty healthy. "Overall, the business was healthy, retention was strong, churn was down, viewing was up," Chief Financial Officer Spence Neumann said. "On the margin, we didn't grow acquisition quite as fast as we would have liked to have seen."
Investor reaction, though, suggests that minds are very much on which streaming rival can prevail in the battle for user growth ahead.
In December, Wells Fargo pulled an interesting experiment, assigning two teams to evaluate streaming media - one with a positive bull case, one with a more negative bearish approach.
The bulls took a stance similar to that of Netflix founder Reed Hastings: The addressable market still has ample growth runway ahead and there are plenty of users for everyone. The bear case thinks it will be "winner-take-most," and it looks like the slightest dent in user acquisition is indeed what's driving such a Netflix downturn.
Can competitors (especially Disney (NYSE:DIS), Amazon (NASDAQ:AMZN) or Discovery (NASDAQ:DISCA) and HBO (NYSE:T)) make hay out of Netflix's stumble? It depends on how investors weigh the rivals' growth prospects, as well as the user base the streamers have today.