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Netflix shares slump as subscriber growth slows
July 25, 2012 / 1:10 PM / 5 years ago

Netflix shares slump as subscriber growth slows

(Reuters) - Shares of Netflix Inc (NFLX.O) fell 18 percent in premarket trading on Wednesday, after the online video rental company warned that it might sign up fewer new subscribers this year than it had targeted.

Investors, who had once bet strongly on the company for its red-hot growth, sold off shares on worries that the Olympic games and the launch of the company’s service in a new market may weigh on the stock.

At least four brokerages cut their price targets on the company’s stock.

HBO on Tuesday said it had no intentions of making a deal with Netflix to stream hits like “The Sopranos” or “Game of Thrones,” stubbing out a possibility that Netflix CEO Reed Hastings had raised in a letter to shareholders.

“Netflix faces risks tied to competition, a slowdown in subscriber growth, global expansion that will offset profitability for years, and cannibalization of the high-margin DVD business,” Janney Capital Markets Research wrote in a note.

Janney analyst Tony Wible cut his price target on the company’s stock to $53 from $67. Wible is a five star-rated analyst for the accuracy of his earnings estimates on Netflix, according to Thomson Reuters StarMine data.

The company’s shares fell to $65.80 in trading before the bell. They closed at $80.39 on Tuesday on the Nasdaq.

Reporting by Shubham Singhal in Bangalore; Editing by Saumyadeb Chakrabarty

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