Shares in Netflix dropped nearly 40% in early trading today (Oct. 15), amid news that the online company is lowering its monthly fees and Amazon.com may be entering the video rental business.

Shares in Netflix dropped nearly 40% in early trading today (Oct. 15), amid news that the online company is lowering its monthly fees and Amazon.com may be entering the video rental business.

Netflix stock dropped to $10.50, vs. yesterday's closing price of $17.43. The company’s stock was trading as high as $39.77 in January.

Netflix announced yesterday that its three-DVD rental plan would be reduced to $17.99 starting Nov. 1. In June, the company raised the monthly plan to $21.99 from the previous $19.95.

The move occurred due to speculation that Amazon.com may be joining the online video rental space. An Amazon.com spokeswoman tells Billboard.biz, “Our customers have encouraged us to offer low-priced DVD rentals, but we have no announcement to make at this time.”

Netflix now offers lower three-DVD plans than competitors Blockbuster, at $19.99 per month, and Walmart.com, at $18.76 per month.

Los Gatos, Calif.-based Netflix also reports that third-quarter revenues increased 96% to $141.6 million from $72.2 million in the same period in 2003. Net income for the quarter was $18.9 million, vs. $3.3 million last year.