Financial Analysts Declare Netflix ‘Broken’ and Suffering ‘Nuclear Winter’

  • Share
  • Read Later

How bad is Netflix’s news that it lost 800,000 subscribers yesterday? Bad enough for financial analysts to start describing the company as going through a “nuclear winter” and “broken,” advising their clients to dump the stock and move on.

Netflix stock fell almost 28% yesterday in reaction to its earnings announcement, leading analysts to tell investors that it’s time to sell up and abandon the company. Multiple analysts, including Sesquehanna Financial’a Vasily Karasyov and Janney Capital Markets’ Tony Wible downgraded the stock from neutral to sell, with even Credit Suisse cutting its target price for the company by more than 50%.

Wible’s analysis of the company’s prospects is particularly damning, with him writing that his company believes that “the Netflix model is unsustainable, as the company faces rising costs that it hoped it could pass onto its subs, which appear unwilling to do so.” With the company itself suggesting that it may operate at a loss throughout all of 2012 due to its European expansion plans, Wible’s take seems particularly persuasive.

Not all analysts are proclaiming doom, however; both Lazard Capital Markets and Wedbush Securities are cautiously staying with their “neutral” takes on the company’s future. But with competition growing all over for the service, the next year could end up being make or break for Netflix.

MORE: Netflix Was Right, and We’re Being Fickle

Graeme McMillan is a reporter at TIME. Find him on Twitter at @Graemem or on Facebook at Facebook/Graeme.McMillan. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.