Home [Chart] Is There A Bottom To Netflix’ Incredible Year-Long Free Fall?

[Chart] Is There A Bottom To Netflix’ Incredible Year-Long Free Fall?

While “Over The Top” technologies like Netflix and Hulu are clearly the wave of the future, the market has bludgeoned Netflix over the past 12 months, knocking 75% off its value. Is this punishment for Netflix’s bad behavior, or a readjustment for the entire OTT market?

There’s plenty of reason to see Netflix as an isolated victim of its own actions, beginning with its disastrous decision to split its DVD and streaming businesses and boost prices on both. And since a price hike was clearly on the table, Netflix might have at least tried to use it keep Starz/Disney content in the network, if only as a premium tier. And their decision to move from a pure content provider to a content studio (competing with its own suppliers) has met mixed reviews.

CEO Reed hastings has made some moves that are incredibly easy to second-guess, but there’s more to the story than one mercurial cowboy. For all its foibles, Netflix is the gorilla of the OTT space, accounting for 20% of peak US Internet bandwidth and the majority of the space it defined.

It didn’t get there by accident, so some of the stock’s fall points to endemic weaknesses in the business model. Access providers will gripe as much about and and movie studios will demand even more from any less-established upstarts looking to challenge the king.


Courtesy of Statista

So where does this leave Netflix’s competition? In the same boat, with second-tier catalogs and a limited margin through which to acquire premium content. For Hulu, the Netflix plummet could cause some reshuffling. Just a month ago, analysts were eyeing a 50x earnings multiple for a Hulu valuation.

Since then, Netflix has dropped from a 49.6 price/earnings ratio to just 32.37. Unless Hulu has some magic up opts sleeve (and it may, given its cozy relationship with current co-owners NBCUniversal and The Walt Disney Company), they should lower their target to the same range. Then again, with a third of its potential value off the table, putting Hulu on the market may not make a lot of sense.

You can read more about Netflix in this week’s DeathWatch.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Get the biggest tech headlines of the day delivered to your inbox

    By signing up, you agree to our Terms and Privacy Policy. Unsubscribe anytime.

    Tech News

    Explore the latest in tech with our Tech News. We cut through the noise for concise, relevant updates, keeping you informed about the rapidly evolving tech landscape with curated content that separates signal from noise.

    In-Depth Tech Stories

    Explore tech impact in In-Depth Stories. Narrative data journalism offers comprehensive analyses, revealing stories behind data. Understand industry trends for a deeper perspective on tech's intricate relationships with society.

    Expert Reviews

    Empower decisions with Expert Reviews, merging industry expertise and insightful analysis. Delve into tech intricacies, get the best deals, and stay ahead with our trustworthy guide to navigating the ever-changing tech market.