Stock Market Today: Netflix's Epic Crash Clips Nasdaq


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The earnings calendar was front and center Wednesday as a mixed session for the broader indexes was easily overshadowed by a plunge in of Wall Street's most notable mega-caps.



Netflix (NFLX) suffered its worst single-day decline in 18 years – a 35.1% nosedive eroding roughly $55 billion in market value – triggered by the company's first quarterly subscriber loss since 2011.


The streaming giant, which expected to add 2.5 million net subscribers during the first quarter, announced it had lost 200,000, triggering a flurry of analyst downgrades despite an easy earnings beat. The shortfall was in part caused by Netflix's decision to pull out of Russia, which cost it 700,000 subscribers, but inflation is also forcing customers worldwide to make tougher spending choices.


CEO Reed Hastings also said NFLX was planning to launch an advertising-supported version.


"The initial allure of Netflix was that it didn't have any ads; it's unclear if Netflix fans will be amenable to advertisements," says David Trainer, CEO of investment research firm New Constructs. "Rivals like Disney can monetize content through a variety of other channels, like merchandise and theme park revenue. Netflix doesn't have the infrastructure for those kinds of revenue streams."


Ripples were felt throughout the streaming industry. Rivals including Disney (DIS, -5.6%), Amazon.com (AMZN, -2.6%), Warner Bros. Discovery (WBD, -6.0%), Paramount Global (PARA, -8.6%), Roku (ROKU, -6.2%) and even Chinese streamer iQiyi (IQ, -6.7%) all finished well in the red.


These losses weighed heaviest on the Nasdaq Composite, which declined 1.2% to 13,453. Faring relatively better were the S&P 500 (down marginally to 4,459) and Dow Jones Industrial Average (+0.7% to 35,160), which were buoyed by more positive earnings news.


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International Business Machines (IBM, +7.1%) was the Dow's top component after it reported a 24% pop in profits and beat top- and bottom-line expectations.


"Stringing together consecutive quarters of outperformance illustrates that there is a clearer path to accelerating growth in 2022," says Morgan Stanley analyst Erik Woodring (Overweight, equivalent of Buy).


Meanwhile, price hikes helped Procter & Gamble (PG, +2.7%) offset inflation-pressured margins and deliver better-than-expected sales and profits.


Tesla (TSLA), off 5.0% during Wednesday's session, was up by roughly the same percentage following a Street-beating Q1 report. Earnings of $3.22 per share easily cleared estimates of $2.26, while revenues of $18.76 billion topped the consensus mark of $17.80 billion.