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At Netflix, the financial horror show appears to be never-ending.
The DVD-rental and video-streaming company yesterday reported steeper customer defections than expected, a forecast for continued cancellations and the likelihood that stepped-up expenses tied to its move into the UK market will result in red ink beginning next year.
After the late-afternoon news, investors stormed the exits — driving down the shares of the Los Gatos, Calif., company by 27 percent in after-hours trading to under $87 and erasing more than $1.6 billion in value.
For CEO Reed Hastings, it is a nightmare of epic proportions.
Just three months ago, Netflix was a darling of Wall Street, hit a 52-week high of $304.79 a share and sported a market capitalization of $16 billion.
Two hours after it announced yesterday that its US subscriber base fell to 23.8 million as of Sept. 30 from 24.6 million a quarter earlier, with investors in full retreat, shares had lost about 71 percent of their value from their 2011 high and roughly $11 billion in market cap had unspooled.
Netflix had predicted its subscriber base would shrink by 600,000.
Hastings has few outside his executive suite to blame for the reversal.
In July, Netflix announced a 60 percent price hike, angering customers. Then, before the stink could dry, Hastings decided to split the DVD business and its streaming operation.
Under the latter ill-fated decision, Hastings decided to name the rental business Quikster and have customers register on separate sites for the two services.
The anger stretched from its West Coast offices, it seemed, into every living room in America. Weeks later, Hastings beat a hasty retreat, which did little to appease the irate base.
In a note to its announcement yesterday, Netflix warned investors that for “a few quarters starting [in 2012], we expect the costs of our entry into the UK and Ireland will push us to be unprofitable on a global basis; that is, domestic profits will not be large enough to both cover international investments and pay for global G&A (general and administrative) and Technology and Development.”
The company has already launched in Canada, where it has 1 million subscribers, and in Latin America. Netflix will halt further expansion after the UK launch, it said yesterday.
Michael Pacter, a Wedbush research analyst, said: “What’s hurting the stock right now is self-inflicted things like the frenzy to expand internationally and their willingness to absorb losses.”
Barton Crockett, media analyst at Lazard Capital, told The Post, “Expectations had got too frothy, and we’re witnessing a painful reset.”
Netflix warned that both DVDs and its streaming business would decline in the fourth quarter. Netflix needs subscriber additions to fuel its Tinseltown buying. The firm said it will spend close to what HBO pays in content fees in 2012.
The shocking customer erosion overshadowed a third-quarter profit of $62 million, or $1.16 a share, that beat expectations. Revenue was $799 million.
To be sure, the company’s fourth-quarter profit forecast fell short of Wall Street estimates — adding to the Hastings horror show.