Everything seemed to go right for Netflix (NASDAQ:NFLX) last week. It posted a blowout third quarter, crushing revenue, earnings, and subscriber targets on Tuesday afternoon. It has another hit on its hands with The Haunting of Hill House, an eight-part horror series based on Shirley Jackson's novel that has even won the praise of the immortal Stephen King. Netflix is killing it, but investors are unfortunately singing a different tune.
Shares of the premium streaming leader initially ticked higher following the strong financial report, but Netflix stock actually closed 2% lower on the week. An NBC News report claiming that Netflix executives are bracing their employees for a critical Wall Street Journal piece on its corporate culture weighed on the stock later in the week. The general market malaise did the rest. Netflix's rally was short-lived, and the stock has fallen 12.5% since its Wednesday intraday peak.
Hit me with your best shot
NBC News compares the upcoming hit piece to the job that the New York Times did to Amazon.com (NASDAQ:AMZN) in the summer of 2015, blasting the online retailer for its hypercompetitive culture. It wouldn't be a surprise if the article doesn't come out, but the stock taking a hit on the news is surprising for a couple of big reasons.
Let's start with the fact that Amazon's workforce is more than half a million hires strong, with many of those employees in low-paying distribution center fulfillment roles. The employee count at Netflix is a little more than 1% of Amazon's tally, with very few low-paying jobs. There won't be much in terms of public outrage when the news comes out that it's a cutthroat culture among the folks earning six-figure salaries at Netflix. It would only be a surprise if that wasn't the case.
Then we can turn our attention to the aftermath on Amazon's stock. The initial piece that came out in mid-August 2015 was quickly picked up by other media outlets. Amazon was vilified, but it wasn't a bad time to be an investor in the world's largest online retailer. Amazon stock has more than tripled since the original article came out.
Netflix deserves better than last week's decline. Its quarter was a beauty, vastly exceeding its own earlier outlook as well as Wall Street expectations. The same stock that took a beating over the summer on a rare quarterly miss and weak guidance for the third quarter should be a market darling now after redeeming itself on both fronts. Instead, we find a stock trading for less than it did after the second quarter's fiasco as well as a week earlier when every single Wall Street pro was underestimating its performance. Netflix is in a better place than it was a week or a quarter ago, even if the stock chart naively argues otherwise.