What happened

Shares of Netflix (NFLX -0.06%) fell 49.2% in April 2022, according to data from S&P Global Market Intelligence. The stock is now down 72% in 6 months, brutally punished by the market's hasty retreat from growth stocks and other risky investments. Even the growth investors who might normally pick up Netflix shares on the cheap under these circumstances have stayed away, because the video-streaming veteran is losing customers for the first time in a decade.

So what

Netflix was on the outs long before April rolled in. The stock took a massive haircut in January after its subscriber growth guidance for the first quarter came in below Wall Street's expectations.

The first-quarter report hit the news wires on April 19, and it wasn't pretty. The soft prediction for subscriber additions turned into a negative number for the first time since the Qwikster era in 2011. Even worse, management sees the negative trends continuing in the second quarter, so the next quarter's subscriber drop looks even larger.

It didn't matter that Netflix also reported revenue right in line with analyst projections while crushing analysts' bottom-line targets. Earnings of $3.53 per share left the Street consensus far behind at $2.90 per share. The company is raising subscription prices and tweaking its business operations to cut costs and boost profits. But investors are ignoring all of that to focus on those all-important subscriber figures. Netflix shares fell more than 37% the next day alone.

A young businessperson points and stares wide-eyed at a laptop screen.

Image source: Getty Images.

Now what

Yes, subscribers are important. Sure, it's disappointing to see Netflix hitting a rough patch and losing as much as 1% of its 222 million paid memberships if that weak second-quarter guidance turns out to be on target. But the days of maximizing subscriber growth at all costs are behind Netflix now. The company is a more mature company with a global business. At the next annual meeting, shareholders get to vote on transforming Netflix from a buyout-resistant upstart with a tiered board of directors into a classic large-cap business where all directors must be elected every year.

So the times, they are a-changin'. Netflix is growing up before our eyes, and investors are trying to hold the company to the growth-oriented standards of yesteryear. That's a mistake.

You can pick up Netflix shares at prices not seen since 2017 and valuation ratios that would look normal for a sleepy chain of retail stores. It's really quite silly, because the media-streaming market is only getting started and Netflix is still the biggest name in that business.

The stock is spring-loaded for a massive rebound, and I expect it to be triggered as soon as Netflix can prove that it can survive a short-lived speed bump and get right back to profitable growth in the long run. Remember, subscribers are just one part of a bigger financial puzzle here.