A lot of bad things have happened with regard to NFLX lately. And I totally get why it has sold off. Among other things the idea of splitting off the dvd-by-mail business from streaming, and having two different brands, was asenine. At least they didn't go through with it.
A more to-the-point critique I think is that the business of streaming is just not that profitable of a business. Because of the Betamax case and 'fair use', renting DVDs was quite profitable. But with streaming, the studios get to name their price and it's not a buy-once, rent-many price, it's a price per-user-viewing. This whole business model is not in Netflix's favor.
And add to that, the studios seem to view NFLX as an enemy and would prefer to work with, I don't know, Hulu? They'd prefer to work with Comcast and sell their movies for $5 a viewing - which is a pretty ridiculous price point if you ask me.
However, with the market cap cut down so drastically, I see this stock as underpriced. It's gone from a growth stock to a value play, basically.
They still make money hand over fist and have a huge leg up on their competition. And despite some damage to their brand in the eyes of their customers, it's still a very strong brand, and they'll recover.
It's a natural tendency of the stock market to swing to extremes, overvaluing a stock while it's a Wall St darling growth stock, then undervaluing it once it's lost its lustre. So it seems only natural that after a big drop now, we'll see a modest rise.