Netflix shareholders are heading for the exits after the company revealed its first subscriber loss in a decade on Tuesday.
The streaming giant shed 200,000 subscribers in the first quarter of 2022 alone, and said it expects to lose another 2 million by the end of the second quarter. Shares are now down almost 70% from their Oct. 29 record high of $690.31 to around $224.
On Wednesday, Wall Street was quick to abandon the seemingly sinking ship. Before earnings, 61% of analysts had buy ratings on Netflix stock, but as of Wednesday morning, just 37% have maintained their bullish views, according to Bloomberg data.
Bank of America analysts, led by Nat Schindler, slashed their price target on the stock from $605 to just $300, citing a “muted growth outlook.”
The analysts now hold an underperform rating for the once-beloved tech darling, and argue that the company’s move to offer a lower-price ad-supported version of its content and limit password sharing won’t help buoy revenue until 2024.
“Although their plans to reaccelerate growth (limiting password sharing and an ad model) have merit, by their own admission they won’t have a noticeable impact until ’24, a long time to wait on what is now a ‘show me’ story,” the analysts wrote.
After years of industry dominance, Netflix is also facing growing competition in the streaming market from media giants including Disney, Amazon, Paramount, and Warner Bros. The crowded field has caused many top investment banks to question the company’s growth trajectory.
UBS cut its price target for the streaming giant on Wednesday from $575 to $355, arguing it will struggle to restart subscriber growth in the competitive streaming market.
“We believe rising competition, macro headwinds, and market saturation will continue to weigh on subscriber growth and are stepping to the sidelines,” analysts led by John C. Hodulik wrote.
Mark Haefele, chief investment officer at UBS Global Wealth Management, added that the bank now sees “consumer-oriented tech firms” facing more headwinds in the coming months.
Netflix did not immediately respond to Fortune’s request for comment about its most recent earnings report.
A growing number of streaming competitors has also led to increased price sensitivity in the market, Ipek Ozkardeskaya, senior analyst at the Swiss online bank Swissquote, told the Wall Street Journal on Wednesday.
“People are asking ‘Is this worth it?’” Ozkardeskaya said. “As prices rise, the worth threshold is being pulled higher, and that’s pushing people to the exit.”
Michael Burry, who rose to fame after being depicted in the movie The Big Short in which he predicted and profited from the mid-2000s housing bubble, weighed in on Netflix’s woes in a now-deleted Tweet on Tuesday.
“Competition came for Netflix,” he wrote.
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