Yesterday, Netflix shares closed the day at $ 70.45, the closing price worse this year. At some point during the day, Netflix shares fell all the way to $ 69 before turning around.The sell-off is mainly due to the announcement Monday that the company is to have a cash flow problem and was forced to raise $ 400 million. Half of it was raised at a sale of stock recorded in T. Rowe Price Associates, while the remaining $ 200 million comes in the form of "private placement of convertible bonds."
Cash flow is a very difficult question. As Wedbush analyst Michael Pachter has written a note to investors yesterday, "Netflix ended the third quarter of $ 366 million in cash and short-term investments, less the amount of debt, the company's streaming rights." But how much less? According to Pachter, the short and long term liabilities of the company "were about twelve times the cash and short-term investments at the end of the third quarter."
It gets worse. Netflix also said it now expects to record a loss in its fiscal year 2012, analysts expected a surprising statement for the period.
"If we are unable to repair the damage to our brand, and turn the negative growth in subscribers, activities, results of operations, including cash flows and the economic situation continues to harm," Netflix wrote in a recent Securities and exchange of storage of the Commission.
Given that, and because of concerns about the volatility of the shares of Netflix, Pachter has turned downward is a provider of streaming, fall under the 12-month target price from $ 82.50 and $ 45.
"As Netflix's wounds are self-inflicted, it is very difficult to determine when, if ever, the management of sacrificing growth at any cost and the return to a path to profitability," Pachter wrote to investors. "Without a clear statement of strategy or an indication of a way to allow a return to profitability, we are pulling numbers out of nowhere."
But Pachter is not alone. Analysts at Canaccord yesterday gave Netflix a "sell" rating and a target price of $ 60. Morgan Stanley also cut its price target on Netflix, but it is more optimistic about the stock, said he now believes the company streaming will jump to 80 cents per share in the next 12 months.
Netflix has not seen an increase in stock price in months. In the last month, Netflix shares fell 41 percent. The extension to three months, the company's shares fell 69 percent. From January 1, Netflix has been reduced by 61 percent. At one point earlier this year, Netflix was trading at over $ 300 per share. As of this writing is $ 69.85.
Worst of all, Netflix does not know if we can change things. Since the strong decline in stocks that began with the announcement of its higher prices for customers who want to deliver content and DVD rental, followed by its spin-off plan Qwikster Netflix has unfortunately been completely unable to elicit investor confidence. It has not helped in the third quarter, the company lost 810,000 subscribers.
What's more, Netflix plans to expand in Europe early next year, while potentially useful for revenue, has criticized some analysts say the company that makes the costs go up too fast and keep it in poor financial condition.
"There was no guarantee that a return to profitability would happen in 2013, but management seems focused on growth at any price, and seems to have abandoned the strategy of operating margin expansion performed in 2007-2011, "Pachter wrote to investors.
In short, Netflix seems to push all the buttons wrong lately. And the sell-off suggests that shareholders do not believe that society can change.
Netflix denied the request of CNET to comment on their actions in the difficulty
