The Netflix bloodbath continued as 150 employees were laid off, and hedge funds dumped its stocks. The company's problems were further aggravated by some hedge funds reportedly selling Netflix shares in response to the streaming service's first-quarter earnings report, signaling wider doubt about the company's future on Wall Street than previously realized.
Netflix laid off about 150 employees as of Tuesday, the majority of them situated in the United States, with a substantial portion of them in creative roles. including film and television.
“Our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly US-based,” an official Netflix spokesperson explained in a statement made to Deadline. “These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We're working hard to support them through this very difficult transition.”
Netflix recently laid off employees in its animation division and in-house website for fans, Tudum. The reduction in costs follows Netflix's disastrous report for the first quarter, which revealed that the streaming service lost 200,000 customers and is expected to lose two million more in the coming months. Netflix’s shares fell around 40 percent after the announcement. In the last year, Netflix's stock fell 68 percent.
A number of hedge funds sold their Netflix investments prior to the earnings announcement, suggesting there is widespread fear of Netflix’s future on Wall Street, according to various reports. Funds such as Tiger Global Management, Winslow Capital Management, and Scopus Asset Management sold off all of their Netflix shares. Reportedly, Bill Ackman, a billionaire hedge-fund investor, recently dumped the 3.1 million shares of Netflix that his fund had acquired in the last few months, saying he had lost faith in his ability to determine the streaming service's future growth prospects.
To compound its problems, Netflix is now facing an action by shareholders accusing the company's executives of misinforming the public about the company's subscriber growth.