Best of StockTwits: Netflix dumped from Wall Street's queueJuly 25, 2012: 2:17 PM ET
Maybe Netflix CEO Reed Hastings needs another Facebook status update about how awesome the company is?
Netflix (NFLX) shares lost more than a quarter of their value Wednesday after the company warned that it may lose money in the third quarter and fourth quarter. Investors were particularly not pleased by Netflix saying that the upcoming Olympics in London may lead to fewer streaming subscribers in the third quarter.
You'd like to think that a growing business would not be subject to such seasonal factors. And blaming the Olympics does seem odd. Was Michael Phelps also the genius who came up with the Qwikster idea? And will Netflix stumble in the winter of 2014 too when we'll all be glued to figure skating in Sochi, Russia?
Other traders pointed out that Netflix faces too much competition. The upcoming "Arrested Development" season is something unique to Netflix. But do you really need Netflix to watch your favorite cable and broadcast shows when you can do that on Hulu? Or Amazon (AMZN)? Or the Web sites of the cable networks themselves?
The 404 line is classic. Although Brian was a bit optimistic. Netflix wound up opening at $64.27 today ... and was barely above $60 in afternoon trading. Shares hit a new 52-week low of $59.20 earlier in the day.
Now to be fair, some think Netflix may be, like Apple (AAPL), a victim of lofty expectations. Hastings probably didn't help matters with his 4th of July week boast about more than 1 billion hours of video being streamed by Netflix customers.
But Netflix, even after the huge plunge in its stock price last year, can't afford to miss estimates of any kind. It remains a very pricey stock. And we've seen what momentum investors do to stocks with high P/E ratios that don't meet analysts' forecasts. Just ask shareholders of Chipotle Mexican Grill (CMG).