Netflix: Love the Service, Hate the Stock

NEW YORK (TheStreet) -- Two weeks ago, as shares of Netflix(NFLX) were trading at $86.65, I asked whether the struggling Internet movie-streaming giant can stay afloat and survive the unrelenting assaults that it continues to receive not only from current rivals such as Amazon.com(AMZN) , Time Warner(TWX) and Coinstar(CSTR) (Redbox), but also from those that have yet to fully enter the market -- names such as Apple(AAPL) and Google(GOOG) .

My question was obviously rhetorical, and I followed up that article with another one listing the reasons why Netflix couldn't survive those attacks.

Since then, the company has done little to dispel doubts about its future, and its shares have dropped 32%. The only question now is how swift the company's demise will be.

Delivery or Delay

Netflix did deliver the goods with its earnings and revenue when it reported quarterly results last week. It met its targets and reported profit of 11 cents a share, topping the average analyst estimate of 4 cents. Revenue was $889 million up from $788.6 million a year earlier.

The problem is its outlook and its slowing subscriber growth. The company said that although it expects to remain profitable in the third quarter, it is forecasting a fourth-quarter loss due to international market expansion.

Wall Street wasn't impressed, and the stock plunged as much as 13% in after-hours trading following the announcement.

The Beginning of the End

What's more, the company seems to continue to ignore its DVD market. Remember those shiny red envelopes that arrived in the mail? The same ones that sent Blockbuster stores to their grave?

Though that model once helped Netflix grow to prominence, the company's recent lack of marketing in that area has caused the service to shed subscribers, and the losses are a drag on the gains in the domestic Internet streaming business.