Midday Market Minute: Netflix Shares Tank After Mixed Reviews of 'Arrested Development'


Netflix shareholders want to know if the stock will suffer any "Arrested Development." Fans of the quirky TV show are now devouring the long-awaited fourth season of the show, available exclusively on Netflix.

But reviews of the cult series were mixed, at best, after the original production series was released Sunday night. Netflix (NFLX) shares tumbled $14 Tuesday -- a drop of 6 percent.
arrested development tv show netflix wll arnett jason bateman
Michael Yarish/AP/NetflixActors Will Arnette, left, and Jason Bateman in a scene from "Arrested Development."
But it's still trading near an all-time high, above $200 a share. So investors want to know if the decline was a "sell on the news" reaction or a sign that the stock is overvalued.

The stock was slightly lower in trading Wednesday morning. It has soared 135 percent so far this year, making it the best performer on the S&P 500 (^GSPC), partly on high expectations for its original programming.

The "House of Cards" series, starring Kevin Spacey, has been a huge success.

Netflix has 36 million subscribers worldwide, but it doesn't provide viewership numbers. However, some private firms indicate that "Arrested Development" attracted a huge audience in the first 24 hours that it was available.

Appearing on CNBC this morning, company CEO Reed Hastings said only that the debut "met expectations."

The company released all 15 episodes of the new season at once, hoping to attract lots of new subscribers. But some analysts worry that many fans will sign up for a free trial of Netflix, do some binge viewing of the show, but not sign up to pay $7.99 a month. So any subscription boost could be short-lived.

And the reviews of the show may not help. Variety said the new season "plays a bit like a reunion special."

One problem is that the show's ensemble cast members -- Jason Bateman, Will Arnett, Jeffrey Tambor, Jessica Walter and others -- are now stars in their own right and involved in lots of other projects. As a result, many of the new shows feature one cast member, and the entire cast was never able to get together.

Netflix is making a big bet on original programming, trying to take a page from the playbook of Time Warner's (TWX) HBO in order create some buzz and attract new paying subscribers. It's committed tens of millions of dollars during the next several years on more original programs, including "Orange is the New Black," due out this summer.

-Produced by Drew Trachtenberg

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I would like to research more about this interesting topic. I know that after reading, I am intrigued to learn more so that I am educated on this politics.

June 01 2013 at 11:35 AM Report abuse rate up rate down Reply
Jack Reacher

When the word, "CULT", is attached to anything one may assume limited success. A TV series is a "Cult classic" when a low percentage of viewers actually watch it. I found the premise of A/D to be boring. I questioned NETFLIX and the decision to make a "big deal" out of it. Especially after N'Flix has such a huge success with "House of Cards", which was excellent. For those you that can't seem to find any quality films on N'Flix it may be because very few quality films are being made in Hollywood. Start searching the Foreign films. They hold a plethora of great films and series.

May 30 2013 at 10:41 AM Report abuse -1 rate up rate down Reply

Even with bad reviews, Arrested Development is bettet that 90% of the crap on TV, maybe 100%, considering everything now is a re-run.

May 30 2013 at 9:20 AM Report abuse rate up rate down Reply

Cable is on its way out because no one can afford it. People have no time any more to watch tv so viewing hours will continue to go down. Alternatives will be the winners such as netflix if they can get more movies

May 30 2013 at 9:00 AM Report abuse rate up rate down Reply
Dawn Rodriguez

Arrested Development started out slow because they had to catch up with the characters and it was a little awkward. The rest of the shows are as good as the first season. I can't believe how quick people judge without a fair trial.

May 30 2013 at 8:53 AM Report abuse rate up rate down Reply

After a couple episodes of Arrested Development it isn't difficult to see why Netflix would feel the pain of a decrease in stock price. Looks like a bad investment to me.

May 30 2013 at 7:45 AM Report abuse rate up rate down Reply
zygi & paris

TV is too stupid to turn on now days.

May 30 2013 at 12:46 AM Report abuse +2 rate up rate down Reply

I agree Netflix needs to expand their movies. They have no Academy Award Nominated movies available. I stopped Netflix when they tried to charge for streaming and then for DVD delivery. Just started again last month. Don't think I'll keep it, there is nothing worth watching.

May 29 2013 at 9:26 PM Report abuse +2 rate up rate down Reply
1 reply to dugandob's comment
zygi & paris

You are so right. I've seen all of their movies 3 X's. Crackle is the worst also, with their commercials butting in every ten minutes.

May 30 2013 at 12:48 AM Report abuse rate up rate down Reply

NetFlix needs to greatly expand the movies available, especially in the Classics area.
There are just too few classic movies available.

May 29 2013 at 9:02 PM Report abuse rate up rate down Reply

So far, I've watched the first two new episodes and like them. They've kept the feel of the original show and it's fun to see these characters again.

I don't understand why investors think this is a failure given that AD was a cult series at the best of times. What are they are actually expecting? I've heard this season will be released on DVD later in the summer, so maybe Netflix will see some extra revenue from that.

May 29 2013 at 7:27 PM Report abuse rate up rate down Reply