Posted: August 6th, 2013
Netflix Company has experienced a decrease of twenty five percent in its shares. Though it had reported that it was performing better than expected, the company is likely to experience a low performance for the rest of the year. The company was aiming at adding about seven million subscribers in USA if the current subscribers fail to do well in the third quarter of the year. From the beginning, to midyear, Netflix took in about 2.3 million domestic subscribers, a number that has significantly increased to twenty four million. Currently, the company is experiencing low performance, but it is making efforts to improve its financial status and give more returns (O’Toole, 67).
The company is expanding worldwide as a strategy. It had announced previously that money would be lost in efforts of making the expansions. In the first three months of 2012, the company lost five million and the value of each share was eight cents. This strategy showed improvement because, in the month of June, subscribers increased, spending more than one billion hours watching videos. Increased positive returns are expected in areas where the company has expanded. The shares also increased by then percent, but the stock was still unstable.
As a financial officer, I think Netflix has declined in its performance due to poor guidance in financial issues. The value of shares has been fluctuating within hours. The most significant thing for this company is expert guidance in making financial decisions. The decision on expanding subscribers internationally was a wise idea since they will be venturing in new markets. Although money was lost, it was for a right cause and returns will be received eventually. The CEO wrote a letter to the investors this month and informed them of the expectation to recover in three years time. This was an ethical gesture from the CEO. Investors and other shareholders have a right to be informed about the operations of the company (O’Toole, 112).
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