12° Nicosia,
25 June, 2024

Netflix loses nearly $45 billion in market cap

Forecast showed almost 3.5M fewer subscribers for 2022 first quarter

Source: Daily Mail

Netflix dashed hopes for a quick rebound after forecasting weak first-quarter subscriber growth on Thursday, sending shares sinking nearly 20 percent and wiping away most of its remaining pandemic-fueled gains from 2020, just a week after raising prices by up to $2 a month.

The streaming platform projected it would add 2.5 million customers for the first quarter of 2022 - January through March - less than half of the 5.9 million analysts had initially forecast.

Netflix tempered its growth expectations, citing the late arrival of anticipated content, such as the second season of Bridgerton, and the film The Adam Project.

The streaming giant's announcement following the end of the trading day sent shares plummeting to 468.38, the lowest levels since June 2020. The precipitous fall comes after Netflix posted a 52-week high of 700.99.

The projection for the first quarter of 2022 is a steep drop-off from the fourth quarter of last year, with the world's largest streaming service adding 8.3 million customers from October to December.

That spike was attributed to Netflix's release of a heavy lineup of new programming, including the star-studded movies Red Notice and Don't Look Up and a new season of The Witcher.

Also, competitors including Walt Disney Co and AT&T Inc's HBO Max, are pouring billions into creating new programming to grab a share of the streaming market.

Industry analysts had projected Netflix would add 8.4 million, according to Refinitiv IBES data.

Netflix saw massive growth in the first quarter of 2020 following the onset of COVID-19, gaining 15.77 million new subscribers as millions worldwide were forced to stay home for long periods of time due to the pandemic.

The streaming platform would see a steep drop-off in the following quarter, however, gaining a mere 1.5 million subscribers in the second quarter of 2020.

The company's global subscriber total reached 221.8 million at the end of 2021.

In a letter to shareholders, Netflix said it believed the ongoing COVID-19 pandemic and economic hardships in several parts of the world like Latin America may have kept subscriber growth from rebounding to levels seen before the pandemic.

The company posted adjusted earnings per share of $1.33, crushing analyst consensus estimates of 82 cents.

Netflix last week raised prices in its biggest market, the United States and Canada, where analysts say growth is stagnating and is now looking for growth overseas.

The company rode a roller coaster during the pandemic, with steep growth early in 2020 when people were staying home and movie theaters were closed, followed by a slowdown in 2021.

Netflix picked up more than 36 million customers in 2020, and 18.2 million in 2021.

Netflix's subscriber growth in 2022 had been expected to stabilize and return to the pace logged before the pandemic when it added 27.9 million subscribers in 2019, analysts say.

The company's upcoming slate includes new installments of Ozark, Bridgerton and Stranger Things, and a three-part Kanye West documentary.

Netflix reported fourth-quarter revenue of $7.71 billion, in line with estimates of $7.71 billion.

The news comes just one week after Netflix raised its monthly subscription price by $1 to $2 per month in the United States depending on the plan, to help pay for new programming to compete in the crowded online streaming market.

The standard plan, which allows for two simultaneous streams per account, now costs $15.49 per month, up from $13.99, in the United States.

The US price of Netflix's premium plan, which enables four streams at a time and streaming in ultra HD, was increased by $2 to $19.99 per month.

Prices also went up in Canada, where the standard plan climbed to C$16.49 from C$14.99.

The price increases, the first in those markets since October 2020, took effect immediately for new customers.

The hikes came on the heels of the streaming service's wildly successful Squid Games. The popular Korean Netflix series was an instant hit after its September 2021 premiere and has continued to draw viewers ever since.

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