Upon releasing its first quarter earnings for 2022, Netflix (NFLX) saw shares tumble in after-hours trading, falling further the next day to close down over 35%. This is historical; while it isn’t the biggest one day drop of an S&P 500 company in history, it’s one of the worst, and it follows a stream of shocking revelations about the company that are hard to parse. Perhaps the most shocking: NFLX is considering introducing advertising, a move that had been unthinkable for a decade as the company proudly and aggressively spearheaded the subscription-only monetization model.

First, let’s point out just how much of a shock this was to Wall Street. Bill Ackman, one of the most prominent hedge fund managers on Earth, took a $400 million loss selling his Netflix shares on the news, and whispers on the street of other funds dumping the stock have followed the earnings release. Sell-side analysts were all pretty positive on Netflix, seeing growth in subscription based internet TV services as a clear headwind for the company over the long term.

So what happened? To answer that question, we first have to keep in mind that NFLX is a growth stock. While earnings, operating margins, and expenses are concerns, they are secondary (or tertiary) to the big concern: growth. Is NFLX getting more subscribers, is it growing revenue, and is it finding more viewers? These are the questions that drive the stock more than EPS, P/E ratios, and other traditional financial metrics.

There is one traditional metric that does matter, through, and that’s revenue. Sales rose 9.8%, a miss from the 12% that analysts were expecting. That’s a pretty big miss, and psychologically important, as it shows NFLX going from double-digit to single-digit revenue growth (these are all year-over-year numbers, the most common comparison used in growth stock analysis). That in itself would punish the stock.

But things get worse.

On a net basis (so accounting for churn with new and old subscribers), Netflix lost 200,000 subscribers. It guided for an addition of 2.5 million subscribers, so this is effectively a miss of 2.7 million people. With 221.84 million subscribers before the quarter started, that’s a miss of 1.3% of its base number of subs. Again, very bad, and made even worse by Netflix’s really awful guidance; if the company had prepared investors for a loss, or even suggested subscribers would be flat, the surprise loss of 200k would not feel so bad. But expectations were too hot, and so the stock tanked.

That’s not all. Things get even worse still.

Looking forward, NFLX guided for sales of $8.05 billion in the second quarter, another 9.7%-ish growth rate. Again, a disappointment, as analysts were expecting guidance of $8.22 billion (yes, it is pretty weird that analysts were making expectations of Netflix’s expectations for the future—equity research often gets very meta). So looking forward, which is crucial for all stocks but especially for growth stocks, Netflix’s revenue growth is going to continue to disappoint. 1Q was not a one-off event.

NFLX has all but confirmed that, also saying that it expects to lose 2 million subscribers in the second quarter, again an unexpected and distressing bit of guidance.

Now the market has very swiftly repriced Netflix from a growth to a value stock.

We can see this clearly by looking at the company’s P/E ratio. Before earnings, that was in the 30s and it is now 20.5. If NFLX falls further in the coming days, it could go below the psychologically significant 20 number, but already it is below the average P/E ratio for the S&P 500, which is 22.54. In other words, NFLX now looks like a value stock.

Will the market treat it as such? That remains to be seen, but it is possible. If so, NFLX will need to focus on things like returning cash to shareholders, cutting costs, increasing margins, and limiting expenses to make shareholders happy. But if it does that in the wrong way—for instance, by cutting spending on content—NFLX could see greater subscriber loss and an even lower valuation. This is not unlikely, given the rising competition in streaming with so many premium and less-than-premium streaming services now competing for consumers’ dollars.

The key now for analysts and investors alike is price discovery: what is NFLX’s future growth rate, what is it valued at, and what exactly are we looking to grow—margins, revenue, or subscribers? And when the market has answered those questions, NFLX shares will find a new equilibrium and possibly a new investor base.