Netflix's Subscriber Growth Chills

Shares of Netflix (Nasdaq: NFL) plunged 20.22% in after-hours trading on Thursday after the streaming giant posted disappointing guidance with its quarterly earnings. Financials: Earnings per share for Netflix reached $1.33 in the quarter and revenue hit $7.71 billion; both were better than expected. Poor Guidance: While the financials in the fourth quarter of 2021 were good, the real problem is Netflix’s subscription guidance for the first quarter of 2022. Analysts expected Netflix to forecast 6.9 million paid net additions, but the company says it will only add 2.5 million. Pandemic: Netflix attributed its problems to "the ongoing Covid overhang” and “macro-economic hardship in several parts of the world like LATAM.” Stiff Competition: The real challenge for Netflix is the competition. The company wrote in its earnings that competition from new streaming companies “has only intensified over the last 24 months” and “this added competition may be affecting our marginal growth.” Bigger Picture: Shares of other streaming rivals also plummeted in after-hours trading on Thursday. Shares of Disney (NYSE: DIS) dropped 3.30% and Roku (Nasdaq: ROKU) fell 4.40%. Optimism: Despite these challenges, Netflix added 1.2 million subscribers in the quarter in the United States and Canada, which was its largest increase in the region in two years. Netflix also recently announced that it is raising subscription prices in the U.S., which will increase revenue. Final Thoughts: Investors may want to buy Netflix because the stock price is lower, but can Netflix jumpstart its subscriber growth again? Hope you enjoyed this commentary. Please subscribe to Early Bird, a free daily newsletter that helps you identify investment trends: https://earlybird.email/

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Netflix's Subscriber Growth Chills

bearish

Shares of Netflix (Nasdaq: NFL) plunged 20.22% in after-hours trading on Thursday after the streaming giant posted disappointing guidance with its quarterly earnings.

Financials: Earnings per share for Netflix reached $1.33 in the quarter and revenue hit $7.71 billion; both were better than expected.

Poor Guidance: While the financials in the fourth quarter of 2021 were good, the real problem is Netflix's subscription guidance for the first quarter of 2022. Analysts expected Netflix to forecast 6.9 million paid net additions, but the company says it will only add 2.5 million.

Pandemic: Netflix attributed its problems to "the ongoing Covid overhang” and “macro-economic hardship in several parts of the world like LATAM.”

Stiff Competition: The real challenge for Netflix is the competition. The company wrote in its earnings that competition from new streaming companies “has only intensified over the last 24 months” and “this added competition may be affecting our marginal growth.”

Bigger Picture: Shares of other streaming rivals also plummeted in after-hours trading on Thursday. Shares of Disney (NYSE: DIS) dropped 3.30% and Roku (Nasdaq: ROKU) fell 4.40%.

Optimism: Despite these challenges, Netflix added 1.2 million subscribers in the quarter in the United States and Canada, which was its largest increase in the region in two years. Netflix also recently announced that it is raising subscription prices in the U.S., which will increase revenue.

Final Thoughts: Investors may want to buy Netflix because the stock price is lower, but can Netflix jumpstart its subscriber growth again?

Hope you enjoyed this commentary. Please subscribe to Early Bird, a free daily newsletter that helps you identify investment trends: https://earlybird.email/

read-time
1 min
400.00
Target Price
2/ 10
Confidence
1-2 Weeks
Timeframe
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Earnings Release
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News
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SEC
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