It's going to get worse before it gets better. At least that's one financial analyst's opinion on the future of Netflix.
The once high-flying DVD-and-streaming company has fallen from grace following a summer of price hikes and ill-advised spinoffs. Though the company later abandoned plans to spin off its DVD business (to the relief of many), Netflix stock is still tanking like a Nic Cage movie.
On Wednesday, Michael Pachter of Wedbush Securities downgraded the company's stock from "neutral" to "underperform." Pachter also said, "There may be no bottom to the company's 2012 losses." We're not financial wizards, but from what we learned from "Wall Street," investors don't like it when a financial analyst uses words like "underperform" and "broken business model."
Web lookups in Netflix's stock soared on the news. Searches for "nflx stock price" and "netflix stock" more than doubled. Unfortunately, the same can't be said for the actual value of its stock. On Wednesday, the stock fell around 6.5%. Meanwhile, the NASDAQ composite was up more than 3%.
The company is a long way from collapse, but it's worth noting that Web searches for "netflix vs new coke" and "netflix ford edsel" are popular among folks looking to compare the company's self-destruction to other infamous business flops. But whereas Ford and Coca-Cola both came back strong, the jury is still out on whether Netflix can survive its own missteps.
Netflix has said that it would report a loss in 2012. The company is trying to raise $400 million to help offset its subscriber loss and the rising cost of content.