If the decision to split its company in two was really a reaction to its customer dismay, then it would have lumped in this news with its subscriber decline warning to investors on Thursday. Indeed, Netflix's latest decision to split into two was more likely a reaction to its falling stock price than a response to angry customers - you can see the steep drop it took after it announced subscriber losses on Thursday. And this wasn't investors reacting to the economy, a supply chain problem, competitor success, or any exogenous shock: it was the company's own doing. In just over two months, Netflix has seen it stock price decline by 52%. As Monday ended, its stock price closed at $143.75. But as the day wore on, the market must have realized that the strategy raises some serious questions about the company's future. At first, the market seemed vaguely hopeful about the plan, with its stock showing a modest gain in early trading. Now today, we learn that Netflix will split in two: it will separate its streaming and DVD-by-mail businesses. It had dropped to $169.25 by the end of day on Thursday. The day before, its stock price closed at $208.71. Last Thursday, Netflix revised its third quarter subscriber estimate down by one million. Then investors learned that Netflix's customers' complaining wasn't just noise: many were canceling their subscriptions. Its stock fell for the next month or so and then vacillated in the low- to mid-$200s for the month that followed. As the market began to see the customer dismay the new pricing plan had triggered, investors began to slowly quickly back away from the company. That was the day its pricing strategy was announced. The peak you see was on July 13th, when the stock price hit $298.73.
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