Business

Netflix shares plummet as the company unexpectedly loses subscribers

blank

Global streaming giant Netflix on Tuesday reported losing subscribers for the first time in more than a decade and forecast another fall in the second quarter, a rare failure for a company that’s been a reliable growth engine for investors.

etflix lost 200,000 subscribers in the first quarter, falling well short of its modest projections that it would add 2.5 million subscribers. Her decision in early March to end service in Russia after invading Ukraine resulted in the loss of 700,000 members. The company’s shares plunged 24 percent in after-market trading.

Netflix’s poor results have hurt other video streaming stocks, with Roku down over 6 percent, Walt Disney down nearly 4 percent, and Warner Bros Discovery down 2 percent.

Netflix, which currently has 221.6 million subscribers, last reported losing subscribers in October 2011. Netflix issued a dismal outlook for the spring quarter, predicting it would lose 2 million subscribers despite the return of highly anticipated series like Stranger Things and The Ozark and the debut of the film The Gray Man ‘ with Chris Evans and Ryan Gosling. According to data from Refinitiv, Wall Street was targeting 227 million for the second quarter.

Revenue for the first quarter rose 10% to $7.87 billion, slightly below Wall Street’s forecast of $7.93 billion. It reported net earnings per share of $3.53.

“The large number of households sharing accounts – combined with competition – creates headwinds for revenue growth. The big COVID surge in streaming obscured the picture until recently,” Netflix said, explaining the difficulties in attracting new customers.

The world’s dominant streaming service was expected to see slower growth amid intense competition from established rivals like Amazon.com, traditional media companies like Walt Disney and newly formed Warner Bros Discovery Inc, and well-funded newcomers like Apple.

According to researcher Ampere Analysis, streaming services spent $50 billion on new content last year to acquire or keep subscribers. That’s a 50 percent increase from 2019, when many of the newer streaming services launched, signaling the rapid escalation of the so-called “streaming wars.”

As growth slows in mature markets like the United States, Netflix is ​​increasingly focusing on other parts of the world and investing in local language content.

“While hundreds of millions of homes pay for Netflix, well over half of the world’s broadband homes do not yet — which represents tremendous future growth potential,” the company said in a statement.

Netflix has been able to raise subscription prices in the United States, Britain and Ireland to fund production and content growth in other parts of the world like Asia, Wedbush analyst Michael Pachter noted. However, the purchase prices in these growth markets are lower.

Benchmark analyst Matthew Harrigan warned that the uncertain global economy is “likely an albatross” for membership growth and Netflix’s ability to keep raising prices as competition increases.

Streaming services aren’t the only form of entertainment vying for consumers’ time. Deloitte’s latest Digital Media Trends survey, released in late March, found that Generation Z, consumers aged 14 to 25, spend more time gaming than watching movies or TV series at home, or even listening to music Listen.

The majority of Gen Z and Millennial consumers surveyed said they spend more time watching user-created videos like those on TikTok and YouTube than watching movies or shows on a streaming service.

Netflix, recognizing consumers’ changing entertainment habits, has started investing in games, but it’s not yet a significant contributor to the company’s revenue.

https://www.independent.ie/business/world/netflix-shares-tumble-as-company-unexpectedly-loses-subscribers-41568078.html Netflix shares plummet as the company unexpectedly loses subscribers

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button