Netflix’s worth has been wiped out by $50 billion as members abandon the service

Netflix’s stock has dropped 35% after the company revealed a sharp drop in subscribers and warned that millions more are on the verge of leaving the streaming service.

It cut the company’s market value by more than $50 billion, and analysts predicted that getting back on track would be difficult.

Netflix faces intense competition from streaming competitors, but it has also suffered as a result of increased pricing and its pullout from Russia.

On the other hand, others questioned the company’s development plans, which include launching a free, ad-supported service.

William Ackman, one of America’s most well-known investors, liquidated his $1.1 billion Netflix investment on Wednesday, losing more than $400 million.

His hedge fund, Pershing Square Capital Management, had bought the stock just three months earlier.

Netflix said in a trading update on Tuesday that its total subscriber count declined by 200,000 in the first three months of 2022, falling far short of its target.

It is also expected that two million more people will exit the programme in the three months running up to July.

In the face of increasing competition from firms like Disney and Amazon, consumers who are short on cash are cutting back on streaming services, while others say there is too much content to choose from.

Netflix continues to be the most popular streaming service in the world, with over 220 million subscribers. It’s creating more original material, and shows like The Crown, Bridgerton, and Squid Game have gone global.

Since October 2011, the company has been steadily increasing its subscriber base in quarters, but it admitted on Tuesday that it was losing customers to competitors and failing to expand due to password sharing.

They also stated that due to the Ukraine crisis, a decision to raise rates in key areas cost them 600,000 subscribers in North America and 700,000 in Russia.

Despite the challenges, revenue climbed by 9.8% to $7.8 billion (£6 billion) in the first three months of the year, compared to the same period the previous year.

Profits fell by almost 6% to $1.6 billion, suggesting a decline from previous quarters.