Netflix acknowledges its first line of business: “Our revenue growth has slowed dramatically” Message to shareholders. Enhancing the massive influx caused by Covid “blocked the picture until recently”.
The reaction on Wall Street was clear: Shares tumbled 36.7 percent to trade near $220 at midday. But the stock was in sharp decline even before Wednesday’s drop, having fallen 40 percent for the year.
David Trainer, CEO of investment research firm New Constructs, thinks Netflix could drop to $150 this year. It advises investors to cut their losses.
“Netflix has been an industry leader but the party is over,” Trainer said Wednesday in comments emailed to The Post.
While streaming competitors like Disney and Paramount can monetize their content through other means, like theme parks and merchandise revenue, Netflix lacks these options. He “can no longer count on subscribers as the only source of income,” Trainer said, “a scale that Wall Street was once obsessed with.”
Netflix still expects revenue from the project to grow to nearly $8 billion in the current quarter, a 10 percent increase from the same period last year. The company also maintains a paying audience of more than 220 million, more than double what it was five years ago.
But the unexpected drop in paid viewers — the company said in January it expected to increase this group by 2.5 million — reflects a steady slowdown in business. The company cited increased competition and the failure of growth caused by the pandemic to drive viewers, prompting more people toward home entertainment options.
“Netflix felt vulnerable yesterday in a way it hasn’t seen before,” said analysts at LightShed Partners He said Wednesday in comments emailed to The Post.
Despite the company’s many acknowledgments, it hasn’t really addressed how its content, especially English-language content, “simply doesn’t resonate” in relation to the money Netflix gives it to it, according to comments by Richard Greenfield, Brandon Ross and Mark Kelly of LightShed. The company spends $17 billion each year, more than any other player in the streaming wars.
The need for ‘better’ content has become more important with the level of competition rising in the past couple of years. Analysts have said that having a volume of ‘good enough’ content is no longer enough.
To tackle the stagnation, Netflix said it will seek to monetize the millions of non-paying viewers who have benefited from account sharing. The company estimates that 100 million households, including more than 30 million in the United States and Canada, share accounts.
“[Account sharing]It’s nothing new,” She said Reed Hastings, co-CEO of Netflix, talks to investors via video. “We are working on how to monetize the engagement,” he said. “Remember, these 100 million families are already choosing the Netflix show. They love the service. We just have to get paid.”
The company is experimenting Two paid sharing features In Chile, Costa Rica and Peru with the aim of persuading existing account participants to start making payments as small as $3.
Hastings also acknowledged the presence of a strong field of streaming rivals. “We have a lot of competition,” he said without naming competitors or movies. “What we have to do is raise things up.” In its letter, Netflix listed Disney Plus as one of its “traditional entertainment companies” to realize “Live streaming is the future.”
In the longer term, Netflix said it expects growth to come mostly from outside the United States. Netflix said it will focus on producing content that “can be made anywhere and liked everywhere,” referring to non-English videos made outside the US as South Korean content. “Squid game” And “We are all dead” and Spain “Stealing money.”
The company recorded net income of $1.6 billion during the January-March period, compared to $607 million in the previous quarter, but it recorded a decline of nearly 6 percent from the first quarter of last year. Its revenue was nearly $7.9 billion, up 10 percent from the same period last year.
Other broadcasters saw their shares fall on Wednesday. Shares of Warner Bros. Discovery fell 6 percent, while Walt Disney shares fell 4.2 percent. Paramount shares fell by only 0.4 percent.
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