Netflix's worth has been wiped out by $50 billion as members abandon the service.

In a brief statement, Mr. Ackman said that while Netflix's plans to change its business model made sense, investing in the company felt too risky.

Netflix's worth has been wiped out by $50 billion as members abandon the service.

Netflix's stock has plummeted 35% after the company disclosed a dramatic decrease in members and warned that millions more are about to abandon the streaming service.

It slashed the company's market worth by more than $50 billion, and analysts said it would be difficult to get back on track.

Netflix is up against stiff competition from streaming competitors, but it was also hurt after raising pricing and exiting Russia.

However, others have questioned the company's ambitions to promote growth, which includes introducing a free ad-supported service.

It also intends to crack down on password sharing, predicting that over 100 million non-paying households utilize this method to access the site.

In a sign of unease, one of America's best-known investors, William Ackman, ditched his $1.1bn investment in Netflix on Wednesday, taking a loss of more than $400m.

His hedge fund Pershing Square Capital Management had bought the shares just three months ago.

In a brief statement, Mr. Ackman said that while Netflix's plans to change its business model made sense, investing in the company felt too risky.

"While Netflix's business is essentially straightforward to grasp, we have lost faith in our ability to estimate the company's prospects with a sufficient degree of certainty in light of recent developments," he said.

Netflix reported in a trading update on Tuesday that its overall number of subscribers fell by 200,000 in the first three months of 2022, falling short of its goal.

It also predicted that two million more people would leave the service in the three months leading up to July.

Some analysts have warned that the streaming behemoth has run out of easy ways to grow after a period of hyper-expansion during the pandemic.

Squeezed consumers are cutting back on streaming services to save money, while some feel there is too much content to choose from amid an avalanche of competition from rivals such as Disney and Amazon.

"Netflix's wider problem, along with the rest of the sector is that consumers don't have unlimited funds and that one or two subscriptions are usually enough," said Michael Hewson, an analyst at CMC Markets.

"Once you move above that something has to give in a cost-of-living crisis, and while Netflix is still the market leader, it doesn't have the deeper pockets of Apple, Amazon, or Disney, which makes it much more vulnerable to a margin squeeze."

However, Julian Aquilina, a senior TV analyst at media research firm Enders Analysis, believes it is incorrect to dismiss the company.

"The streaming market is evolving, and people's high expectations for Netflix are being re-evaluated.

"However, because of its dominant position, I believe it will continue to be the market leader." Netflix will not be the first option for consumers who want to cancel their membership."

He went on to say that the company had recently raised its prices, "which always results in a loss in subscribers but also means it makes more revenue per user."

With over 220 million subscribers, Netflix remains the world's most popular streaming service.

It is increasingly producing its content and shows such as the Crown, Bridgerton, and Squid Game have been global hits.

The company had been growing its subscriber base in quarters without interruption since October 2011, but it confessed on Tuesday that it was losing consumers to competitors and struggled to expand due to password sharing.

They also claimed that a move to hike rates in important areas cost it 600,000 subscribers in North America alone, as well as 700,000 in Russia due to the Ukraine crisis.

Despite the difficulties, income increased by 9.8% to $7.8 billion (£6 billion) in the first three months of the year, compared to the same period last year.

Profits dropped more than 6% to $1.6 billion, indicating a downturn from previous quarters.