Netflix Dips 8.5% to $906.36 on Subscriber Growth Concerns

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Sharp Decline in Netflix Shares Reflects Market Concerns About Company’s Strategy for Converting Password Borrowers into Paying Customers Reaching Its Limit

Netflix shares experienced a significant 8.5% decline on Thursday, closing at $906.36, as MoffettNathanson analysts raised concerns about the sustainability of the company’s subscriber growth following its successful password-sharing crackdown. The analysts suggested that the surge in paying customers, driven by the conversion of password borrowers, may have reached its peak.
While Netflix’s strategy to convert unauthorized viewers into paying subscribers yielded substantial global growth, the company is now facing the prospect of decelerating subscriber acquisition. “It is likely Netflix has a few more quarters of strong subscriber growth driven by its content slate and ad-tier, but we do expect the benefits of the password-sharing crackdown to slow,” stated Robert Fishman, an analyst with MoffettNathanson Research, in a report released on March 6th.

The analysts’ report, which triggered an $84.56 drop in Netflix’s stock price, highlights the potential limitations of relying solely on password-sharing conversions for continued subscriber growth. Investors are now grappling with the challenge of gauging future subscriber trends, as Netflix ceased reporting quarterly subscriber numbers at the start of 2025, shifting its focus to revenue and profit metrics.

The streaming giant’s fourth-quarter 2024 performance, which saw the addition of 19 million subscribers—a record high fueled by events like NFL games and the Tyson-Paul boxing match—surpassed even the subscriber growth seen during the COVID-19 pandemic. However, the MoffettNathanson report suggests that the recent surge in paid subscriptions primarily reflects improved monetization of existing users rather than a substantial expansion of Netflix’s overall user base.

“This implies that the elevated level of global subscriber growth for Netflix does not represent as significant an expansion of its user base. Rather, it is leading to Netflix (very successfully) improving the monetization of its existing userbase,” the analysts wrote.
Looking ahead, Netflix’s revenue growth may hinge on strategic pricing adjustments and the continued expansion of its advertising business. The company recently announced its first price hikes in two years, including an increase for its advertising-supported tier, signaling its intent to bolster revenue streams beyond subscriber acquisition.