Netflix stock plummets

Reuters reports: Netflix Inc's shares plunged almost 40 percent on Tuesday and were set to open at their lowest level since March last year, a day after the movie rental company warned of higher subscriber attrition and mounting costs.

On Monday, the company said it would see more cancellations as it grapples with the fallout from a price increase and other unpopular moves, including a failed attempt to split its online and DVD services into two separate companies.

"We believe the NFLX model is unsustainable, as the company faces rising costs that it hoped it could pass onto its (subscribers), who appear unwilling to do so," Janney Capital Markets said in a note to clients. The brokerage cut its rating on the stock to "sell."

The company that shook up Hollywood with its DVD-by-mail service has seen its shares plummet since July, when it announced a price rise for subscribers who wanted both DVDs and streaming. Since then, its market value has shrunk by about $9.76 billion.

Netflix -- which is trying to recover from the roughest patch in its nearly 15-year history as it moves to emphasize online streaming of television and movies at a time when its traditional domestic business hits a wall -- forecast a loss for the first quarter of 2012 as it spends more to expand into Europe.