mars 31, 2023


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Netflix’s bleak outlook erases much of the pandemic’s gains

Netflix dashed hopes of a quick recovery after forecasting weak subscriber growth in the first quarter, sending its shares down about 20% and erasing most of its remaining pandemic-fueled gains from 2020.

The world’s largest streaming service has forecast that it will add 2.5 million customers from January to March.

That was less than half what 5.9 million analysts had predicted, according to Refinitiv IBES data.

Netflix has softened its growth forecast, citing delays in the arrival of expected content, such as season two of « Bridgerton » and Ryan Reynolds’ time-travel movie « The Adam Project. »

Netflix stock prices are down nearly 20% to $408.13 in after-hours trading on Wall Street last night.

Rival Walt Disney, whose future has bet on building a strong streaming business, saw its shares fall 4%. Roku streaming device is down 5%.

Netflix added 8.3 million customers from October to December, when it released a slew of new shows including the star-studded films « Red Notice, » « Don’t Look Up, » and a new season of « The Witcher. » Industry analysts had expected 8.4 million.

The company’s total global subscribers at the end of 2021 reached 221.8 million.

In a letter to shareholders, Netflix said it believes that the ongoing Covid-19 pandemic and economic difficulties in many parts of the world such as Latin America may have kept subscriber growth from recovering to pre-pandemic levels.

Co-CEO Ted Sarandos said in a post-earnings video interview that Covid « created a lot of stumbles » that made subscriber numbers difficult to predict, « but all the business fundamentals are very strong. »

The company reported adjusted earnings per share of $1.33, which beat analysts’ estimates of 82 cents. Revenue was $7.71 billion, in line with estimates.

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Netflix last week raised prices in its largest markets, the United States and Canada, where analysts say growth is stagnating, and they are now eyeing growth abroad.

The company rode a roller coaster during the pandemic, with sharp growth in early 2020 when people were staying at home and movie theaters closed, a slowdown followed in 2021. Netflix picked up more than 36 million customers in 2020, and 18.2 million in 2021.

Analysts said Netflix subscriber growth was expected to stabilize in 2022 and return to the pace it recorded before the pandemic, when it added 27.9 million subscribers in 2019.

The company’s upcoming roster includes new parts from « Ozark » and « Stranger Things, » the three-part documentary Kanye West.

Netflix’s upcoming slate includes new installments of ‘Ozark’

Competitors, including AT&T’s HBO Max and Disney, are pouring billions into creating new software to capture a share of the streaming market.

Netflix said the competition « may affect our marginal growth for some, » but added that it was still growing in every country as new streaming options were launched.

« Even in a world of increased uncertainty and competition, we are optimistic about the long-term growth prospects as streaming replaces linear entertainment worldwide, » Netflix said in the shareholder letter.

In their video interview, executives sought to reassure investors that Netflix’s long-term prospects were bright.

Sarandos said the service has not seen a decrease in customer engagement or retention, and predicted that the shift to broadcasting from traditional television will continue to open up opportunities around the world. The stock remained down about 20%.

“It can be a little difficult to relate to the pace of migration from time to time when there are some kind of global event or even local conditions,” Sarandos said. “But it definitely happens. There is no doubt about that.”

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The company is looking for new ways to attract customers including mobile video games. Netflix said it released 10 games in 2021, and was pleased with the early reception and will expand its game collection in 2022.