Netflix’s Stubborn Stock Slump May Show Investor Fatigue

(Bloomberg) -- The last time Netflix Inc. fell this much, the shares had recovered by now.

Three hours into Thursday’s session, the stock is down 11%, a move that has worsened since trading opened as investors digest a big miss on quarterly subscriber numbers. It’s the worst drop for Netflix since last year’s subscriber numbers fell short of expectations -- the difference this time is that the declines are holding. While Netflix dropped as much as 14% after earnings a year ago, the stock had pared those declines to just 5% by midday amid a slew of bullish analyst commentary.

Wall Street is still bullish after this report, but investors may be less forgiving. The stock is on pace for its biggest decline in three years if the move holds until the market closes.

Meanwhile, short sellers are taking a payday; Netflix is the third-largest U.S. equity short in dollar value, behind Tesla Inc. and Apple Inc., according to financial analytics firm S3 Partners. Short interest accounts for about 4.3% of the available shares.

--With assistance from Elena Popina.

To contact the reporter on this story: Catherine Larkin in Chicago at clarkin4@bloomberg.net

To contact the editor responsible for this story: Courtney Dentch at cdentch1@bloomberg.net

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