Chris

Not necessarily. Tech companies, whether startups or more established ones doing something very new, are often priced more on future potential rather than current earnings (which is how the dotcom bubble occurred). When it becomes apparent that future earnings have been overestimated, there can be a sudden, sharp price correction (which is why the dotcom bubble burst).

Largely because of the dotcom crash, investors are generally more cautious these days and are liable to bail out at the first sign that earnings potential isn't being realised. In Netflix's case it isn't current earnings that has disappointed anyone (their earnings are on target), but their international growth (which is not on target). This follows a failure to hit target for two consecutive quarters in their domestic market last year.

In short, investors are beginning to wake up to the possibility that Netflix may reach saturation point some considerable way short of where some people assert it is heading.