NETFLIX: STOCK FREE FALL CONTINUES

Netflix shares fell $ 10.35 (-2.6%) on Monday, to $ 387.15, continuing the free fall that began last week when the platform revealed that it closed 2021 with slightly fewer stocks. subscribers and after sharing low forecasts for the first quarter of 2022.

Advertisements

At around 11:50 am ET, Netflix stock traded at $ 353.31 per share, plunged to $ 351.47 by noon as NASDAQ fell 5%, only to recover sharply at the end of the day. The stock closed at $ 397.50 per share on Friday.

On January 19, the day before the announcement, Netflix shares were trading at $ 508.16 at the close of the market.

Missed forecasts

On Thursday, January 20, Netflix reported its fourth quarter 2021 earnings: 8.28 million subscribers during its last financial quarter. Once again, international markets were the driving force, with a total of 221.8 million subscribers worldwide at the end of 2021.

Netflix had instead expected 8.5 million subscribers while according to FactSet, Wall Street analysts had expected growth of 8.3 million.

The company shared a rather low estimate for the first quarter of 2022: 2.5 million new subscribers. For Q1, Wall Street analysts had expected 7.25 million new subscribers, according to FactSet.

During the conference call with reporters, Netflix CFO Spencer Neumann noted:

“It’s hard to say exactly why our acquisition didn’t recover to pre-COVID levels. This is probably a bit of a general overload from COVID that is still happening after 2 years of a global pandemic from which unfortunately we have not yet fully emerged, with some macroeconomic tension in some parts of the world such as Latin America in particular “.

Netflix ‘s disappointing earnings report came in the wake of the January 14 announcement of price hikes in the US and Canada. This decision will lead to increased revenue but will likely result in a hike in the cancellation rate in its more mature and slower-growing region.

For US subscribers, the standard two-stream HD plan goes up by $ 1.50 (about 11%) from $ 13.99 to $ 15.49 per month. This is Netflix ‘s third price increase in as many years.

The initial collapse

Disappointment over slowing subscriber growth led to a barrage of downgrades by analysts on Wall Street. Market watchers have instead noted the intensification of competition from rival streaming platforms, such as Disney + and Prime Video .

Investors were likely frightened that Netflix admitted in its quarterly letter to shareholders that intensifying competition in the streaming wars.

“It could affect our marginal growth.”

Netflix shares fell more than 20% after the markets closed following Thursday’s announcement .