Everyone is astounded by the collapse of Netflix’s stock.
And the drop has indeed been breathtaking.
After hitting a high of $291 in July, Netflix (NFLX) has fallen to $113, a drop of more than 60%.
Ouch.
But when one takes a longer-term perspective, the drop quickly seems like much less of a big deal.
Netflix’s stock is now back to where it was in mid-2010, just over a year ago. And it’s still up more than 20X from a low of $5 back in 2002.
What’s more, Netflix’s stock has already weathered one even worse drawdown: A drop of about 75% from 2004-2005, when the company launched a price war against Blockbuster. (We know how that one turned out).
Here’s a log-chart of Netflix’s stock from its IPO to today. (Unlike a linear chart, which treats all dollar increments equally, a log chart plots percentage-moves equally). It puts the crash in context.
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Article source: SAI http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/-2k6v5XOc_c/netflix-stock-crash-in-context-2011-10