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Netflix Stock Plunges after 800,000 Members Quit

Justin Sullivan/Getty Images(NEW YORK) -- If you were angry enough at Netflix to cancel your membership over major changes to the movie delivery service, you weren't alone: there were 810,000 people just like you, the company announced Tuesday.

The news sent the one-time Wall Street darling into another tailspin Tuesday as the stock -- already down 60 percent since the company announced a price hike in July -- dropped another 35 percent after the opening bell. Netflix stock briefly hit $300 per share on July 13; Tuesday it dropped below $75.

All of the red arrows for the company known for its red envelopes stemmed from a doubly disastrous decision. Netflix had a successful movies-by-mail service, but decided it would be left behind if it kept sending DVDs to people instead of streaming them online. When the company tried to jack up its prices -- and spin off its mail service to a new business called Qwikster -- customers revolted.

"They're making a transition from a 'momentum stock,' where you can do no wrong," said Vasily Karasyov, an analyst at Susquehanna Financial. "When the momentum's gone, you see the complete annihilation of the share value. That's why they call it a momentum stock."

Netflix actually beat Wall Street estimates when it reported profits Monday, but it warned that it would lose money in 2012. It needs to clean up the mess in the U.S., and it's trying to expand its service in the U.K.

"We moved too quickly," CEO Reed Hastings told ABC News last month. "We didn't give it enough thought. We didn't give it enough explanation, enough integration, and you know, that's legitimately caused our customers to be angry."

Karasyov is among several analysts who have downgraded Netflix stock to "negative" from "neutral."

"There is no quick fix," he said. "It there were a quick fix, don't you think they would have done it by now?"

Copyright 2011 ABC News Radio

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