How the News Published by CNBC Website Hurt the Share Price of Netflix Inc.

Price Impact of News
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Price Impact of News
Netflix, Inc. (NFLX)
This paper will refer to an article published on the official CNBC website on January 21, 2022, regarding Netflix’s admittance that competition is eating into its profit. This news was the first time Netflix publicly admitted that competition in the streaming sector was at its peak and eating into its profits. In my deductions, the news should hurt the share price of Netflix Inc.
The article was published on January 21, 2022. Two weeks before the article’s publishing (January 7, 2022), the share price of Netflix was $549.46. On January 20, 2022, Netflix stock price was $517.75.
From the above, we can obtain the return on the stock within the two weeks as:
517.75-549.46549.46 x 100%
=- 5.77%
After this news release, on January 21, 2022, the Netflix Inc. share price slumped to $400.43. these indicated a return on the stock of:
400.43-549.46549.46 x 100%
- 27.12%
Within one day:
Two weeks after this news broke (February 4, 2022), the share price for Netflix Inc. was $407.31. This represents a return on the stock of:
407.31- 400.43400.43 x 100%
=1.72%
When we compare the stock price of two weeks after the news and that of two weeks before the news, we obtain a return on the stock as:
407.31- 549.46549.46 x 100%
= -25.87%
This news hurt the share price of Netflix. Inc. The maximum impact was on the news day when the return on stock dropped more than 27%. The share price fell further on the following four days before slightly rising. Two after the news, Netflix had only recovered 1.7%, indicating the news’s significant damage. These findings ar...