Netflix Inc. is throwing out all of its old rules after losing customers for the first time in a decade, saying it will introduce an advertising-supported option and crack down on people sharing passwords.
The plans are intended to help staunch the loss of subscribers that pummeled the streaming service Wednesday, pushing the stock down as much as 29% in premarket trading in New York and potentially wiping about $43 billion from its market value. It the decline holds, it would put Netflix on course to be the worst performing stock of the year on both the benchmark S&P 500 and Nasdaq 100 indices.
Co-founder Reed Hastings has said for years that he doesn’t want to offer advertising and had no problems with password sharing. But the company is changing course after losing 200,000 customers in the first quarter, the first time it has shed subscribers since 2011. Netflix also projected it will shrink by another 2 million customers in the current second quarter, a huge setback for a company that regularly grew by 25 million subscribers or more a year. Netflix also will curb its spending on films and TV shows in response to the customer losses.
