Netflix shares tumbled on Wednesday after the company greatly disappointed in subscriber numbers in the second quarter. Analysts quickly got to work slashing their price targets, but as always, bulls will be bulls and bears will be bears. Interestingly, some of Netflix’s biggest bulls were the ones who slashed their targets, while one of the company’s biggest bears actually raised his target.

Netflix, Inc. NFLX

Un-grandfathering hits Netflix

Netflix management mentioned the un-grandfathering of long-time subscribers, whose monthly subscription price went up to bring them in line with newer subscribers. The streaming company had grandfathered in older subscribers at the previous price for two years, but that came to an end just recently. But management blamed media reports about the un-grandfathering for the massive disappointment in subscriber numbers, saying that consumers misunderstood the reports and thought this was a new price increase.

Netflix added only 160,000 domestic subscribers, compared to the guidance of 500,000, and 1.52 million international subscribers, compared to the outlook of 2 million.

Concerns about competition

Wedbush analyst Michael Pachter and team still think Netflix is overvalued, but they bumped up their price target for the company’s stock from $45 to $50 per share following last night’s disastrous earnings report. They also reiterated their Underperform rating. They believe that by delaying the price increases that were previously scheduled for May, the company has only created a problem with its investors. They expect the slowing domestic growth to drag on for the next couple of quarters as up to 30 million more subscribers are un-grandfathered over the next five months.

They also remain concerned about the risk of competition, especially from Amazon. They do believe that Netflix’s brand is bigger for streaming video on demand, but they’ll be watching Amazon as they believe that it “declared war on Amazon” with its new standalone offering.

“The mother” of all misses for Netflix

Morgan Stanley analyst Benjamin Swinburne and team slashed their price target for Netflix from $125 to $110 per share but maintained their Overweight rating on the stock. They were surprised about the dramatic impact the un-grandfathering had on the company because they had convinced themselves that it would only be “modest.”

They add that the fact that it is so easy to sign up and cancel Netflix has fueled growth for the company, but it also opens the door for a greater churn risk due to price hikes, which was observed in the second quarter. They see the increase in the churn rate among subscribers not facing a price increase this year as being the bigger concern than the miss on subscriber numbers.

Despite the concerns, they’re not giving up on Netflix yet. They believe that the impact of the price increase on the churn rate is now discounted into expectations. Additionally, they see the third quarter as being especially challenged due to the combination of a price increase and the Olympics. They believe the price increase was poorly timed because it comes during the quarter with the lightest seasonal viewing, not to mention that management already highlighted that the Olympics may weigh on subscribership.

Still bullish items in Netflix’s earnings report?

Canaccord Genuity analyst Michael Graham and team actually found something good to pick out of Netflix’s earnings report. Domestic and international revenue was in line with consensus, they explained, and domestic and international contribution profits beat consensus. Additionally, third quarter revenue and profit guidance were higher than previous estimates. The Canaccord Genuity team cut their price target for Netflix from $120 to $115 but maintained their Buy rating on the stock.

Of course investors will now be wondering whether the massive disappointment in subscriber numbers is temporary and due to temporary factors or whether it is structural in nature and indicative of long-term problems.

Pirates hitting Netflix

Pivotal Research analyst Jeffrey Wlodarczak also slashed his price target for Netflix, pushing it from $145 to $125, although he also maintained his Buy rating on the stock. He believes that the price increase results in a significant jump in piracy via the sharing of passwords, basing this view on the huge discrepancy between the company’s results and Nielsen’s results. However, he also expects that a good chunk of the more than 7 million “pirate subscribers” will end up becoming paying subscribers.

Shares of Netflix declined by as much as 13.76% to $85.21 during regular trading hours on Tuesday.