Netflix Shares Plunge 35 Percent as Subscribers Flee

Shares of entertainment provider Netflix plunged 35 percent even before the market opened Tuesday after the company reported 810,000 subscribers had fled and said it expects to record a loss in 2012.

Shares were trading around $78, nearly $41 below their Monday close of $118.84. The plunge could strip as much as $2 billion from the Los Gatos, Calif.-based company's market value.

CEO Reed Hastings told investors Netflix expects further subscriber defections in the current quarter, although the Dec. 31 projection is for a slight rebound, to about 21.5 million.

Netflix reported third-quarter net income jumped 65 percent to $62.5 million as revenue rose 49 percent to $821.8 million. The profit came despite the company's 60 percent fee hike and an ill-fated plan to split into two companies, Netflix and Qwikster.

Hastings estimated Netflix will post fourth-quarter net income between $19 million and $37 million on revenue around $875 million --- down from the third quarter. Analysts had been expecting much higher profit and revenue exceeding $900 million.

Netflix's woes come as rivals are growing. Amazon's Prime service is being offered free for new buyers of the Kindle Fire and Apple is offering new media services through the cloud platform.