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Illustration: Lazaro Gamio/Axios

Netflix's stock was down nearly 14% in after-hours trading Monday after the company missed expectations on revenue and subscriber growth. Stocks for almost every other tech company in the streaming business, like Roku, Spotify, Twitter, Facebook and Google, were also down following the news.

Why it matters: Netflix's miss is reigniting debate around whether the new tech economy, where companies are highly valued despite being barely or far from profitable, is sustainable long-term.

"The bulls expected continuing upside to their subscriber guidance ... and when those expectations were cracked, the stock cracked."
— Michael Pachter, managing director of Equity Research at Wedbush Securities to Axios

The miss wasn't entirely shocking. Most analysts agree that Netflix's momentum wasn't sustainable, especially in the U.S., where analysts say the tech giant was beginning to reach a point of saturation.

  • Jill Rosengard, EVP at broadcast research firm Frank N. Magid Associates, tells Axios their research predicted a 2% net decrease in subscribers for Netflix in the U.S. six months ago.
  • The streamer is also facing increasing competition from other subscription video on-demand companies gaining market share, like Amazon, HBO and Hulu, as well as legacy media companies looking to break into the on-demand economy, like Disney and AT&T, says eMarketer principal analyst Paul Verna.

Bullish investors argue that the company will bounce back, and that Netflix is still an attractive investment for the foreseeable future.

"As an investor, we're looking over next five-ten years and Netflix is the number one service that every single person uses in general and probably across the world in the next couple of years. We're not concerned about the business. We love the way the numbers are trending. The only issue anyone has with the stock is the valuation."
— Ross Gerber, Co-Founder, President and CEO of Gerber Kawasaki Wealth and Investment Management on CNBC

Bottom line: The corporate structure of newer tech companies, as well as the pace of tech innovation, has caused investors to reward companies that can scale and adapt to consumer trends quickly, as opposed to companies that focus on consistently delivering profit, like legacy media networks.

  • Because of this, streaming companies are able to invest billions of dollars in creating and buying content to lure viewers from traditional networks, creating a virtuous cycle of dominance.
  • Case in point: Netflix topped HBO for the first time in 17 years with the most Emmy nominations for a network this year.

What's next? None of Netflix's competitors consistently disclose subscriber numbers, but earnings over the next few weeks for AT&T (HBO's new owner), Amazon, and Hulu's owners (Disney, Comcast, Fox and Turner, now owned by AT&T) could shed light on their content strategies.

Go deeper: The rising cost of digital TV

Go deeper

Updated 12 mins ago - World

U.S. threatens to cut aid to Sudan after military takeover

Sudanese Prime Minister Abdallah Hamdok during a 2020 news conference in Khartoum, Sudan. Photo: Mahmoud Hjaj/Anadolu Agency via Getty Images

Sudan's civilian Prime Minister Abdalla Hamdok was put under house arrest and several other ministers were detained Monday in what appears to be a military coup in the country, per local reports.

The latest: The head of the military faction of the Sudanese government, Gen. Abdul Fattah al-Burhan, said in a statement that he is announcing a state of emergency, suspending several parts of the interim constitution and dissolving the civilian government and interim sovereignty council — the highest governing body in the country.

Facebook's pivotal week

Illustration: Aïda Amer/Axios

They're battening down the hatches at Facebook headquarters this week as the company faces a trifecta of tumult: a continuing wave of negative press coverage fueled by document leaks, a critical earnings report Monday and a reported name change looming.

The big picture: All this is unfolding as Mark Zuckerberg tries to transform Facebook from a social network into the prime mover behind a new "metaverse" of VR- and AR-driven remote work and play.

3D-printed houses seem poised to go mainstream

A rendering of a planned 3D-printed, net-zero-energy community in Rancho Mirage, Calif. Photo: Mighty Buildings

3D-printed cement houses are about to take off, offering a cheaper, more efficient way to provide homes for those who need them — as long as they can be built in ways that don't worsen climate change.

Why it matters: Developers of 3D-printed homes think they can take on multiple challenges: the affordable housing crisis, the shortage of skilled labor and rising material costs.