Netflix: Investors and Customers Agree

According to a recent report by market researcher ForSee, Overstock.com Inc. (NASDAQ:OSTK), Sony (NYSE:SNE) and Gap Inc. (NYSE:GPS) were among the worst-performing websites in regards to customer satisfaction.  However, the largest year-over-year decline came from Netflix (NASDAQ:NFLX).

Netflix saw the biggest decline in customer satisfaction this year, after the company’s decision to raise prices and split its DVD and video-streaming services alienated many users. Though the latter plan was scrapped, the former had customers subscribing to both the DVD and streaming services paying 60 percent more each month.  “Netflix totally misread its customer base and is paying the price, damaging its brand among both consumers and investors,” said Larry Freed, chief executive officer of ForSee.

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The recent fall from grace at Netflix has been a nightmare for shareholders.  In the past six months, shares have fallen 74 percent.  There were several insiders that significantly reduced their stock shares in Netflix ahead of the rapid price decline.  Chief Content Officer Theodore A Sarandos, sold more than 7,000 shares worth $1.7 million in August.  Director Richard N Barton, sold 9,620 shares worth $2.6 million at the end of July.  However, CEO Reed Hastings sold the most ahead of the decline.  Hastings sold 15,000 shares worth more than $4 million throughout July.  Shares of Netflix hit their all-time high of $304.79 on July 13.  Currently, shares trade near $70.

Between insider selling and the sharp fall in share price, many investors continue to flee from Netflix.  According to SEC data, Tiger Global Management LLC sold their entire 1 million shares position worth $270 million in the third quarter.  Neuberger Berman Group LLC and Ivory Investment Management LP also sold their entire positions of 949,937 and 908,300 shares, respectively.  Rounding out the sellers are Lone Pine Capital LLC and Calamos Advisors LLC.  Both institutions completely sold out of their multi-million dollar positions in the third quarter.  In the meantime, there has been little positive trading activity in Netflix shares, which suggests that investors are still not ready to jump back into Netflix.

Netflix competes for viewers with high profile companies such as Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) and Dish Network (NASDAQ:DISH).

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