After manipulation, the market sentiment has the biggest influence on a stock price. The news that Netflix dropped over 50 points was an article that piqued my interest as I was expecting some downward movement.
Netflix’s share price is up about 115% from last year which is a very large gain. Its performance can be attributed to increasing valuation multiples more so than actual performance. It has increased its debt to secure money to finance its production costs and it has a low cash flow projection. Also the pricing structure of Netflix in relation to its competition, cable companies, has changed. A few years ago Netflix was the low cost leader, now cable companies have plans that are price competitive to Netflix with comparable programming.
A significant drop can change the mood of the market traders which may result in a flash crash. This would not only tank Netflix but seeing how it along with 4 other companies are generating about 91% of the S&P gains. The other companies and their contribution percentage are Amazon (35%), Microsoft (15%), Apple (12%) and Facebook (8%). Netflix accounts for 21%, so if Netflix were to trigger a sell off, this would adversely affect the S&P as a whole.