Netflix, Inc. shares suffered a bloodbath on Wednesday, having shed over 35 percent in a single session, following its disappointing quarterly results and weak guidance.
What HappenedThe California Public Employees' Retirement System lost about $695 million of its Netflix bets following Wednesday's plunge. The largest state pension fund in the U.S., with $450 billion in assets under management, held 1,779,811 Netflix shares, valued at about $1.07 billion, at the end of the fourth quarter of 2021, 13F filing with the SEC showed.
At Wednesday's closing price of $226.19, CalPERS' 1,779,811 shares are now worth $402.42 million. This suggests a $669.4 billion shave-off from the value of the fund's holdings at the end of the fourth quarter.
Why It's ImportantA turnaround may not be imminent at Netflix, sell-side analysts say. Higher penetration rates and intensifying competition could leave the company struggling in the near to medium term.
Netflix pointed to some measures it is taking—including cracking down on password sharing, running an ad-supported subscription plan and investing in content. All these could take 18-24 months to fructify, KeyBanc Capital Markets analyst Justin Patterson said in a note. The analyst also said operating margins could remain subdued due to investments made to drive revenue growth.
A slew of sell-side firms took down their price targets for Netflix shares drastically and recommended staying on the sidelines.
After Wednesday's more than 35 percent plunge, Netflix' shares were down an incremental 0.98 percent at $223.97 in premarket trading on Thursday, according to Benzinga Pro.
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