Stock in Netflix has fallen in value again after the video streaming giant missed on Wall Street forecasts for subscriber growth with its latest earnings report.
On Monday, shares in Netflix fell by $10.35, or 2.6 percent, to $387.15, as it added to steep stock price falls since late last week when the global streamer fell short of Wall Street expectations for new subscriber additions.
At midday, shares in the global streamer had tumbled to as low as $351.47 as the tech-heavy NASDAQ market fell by 5 percent at one point before a sharp recovery in late-day trading. A day before its Jan. 20 earnings, Netflix traded at $508.16 at market close.
Releasing its fourth quarter earnings on Jan. 20, Netflix reported 8.3 million new subscribers during its latest financial quarter, which missed on analysts expectations for 8.5 million in net subscriber growth.
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Heading into the first quarter of 2022, Netflix set a low forecast of 2.5 million subscriber adds in its latest company outlook. During an earnings call with reporters, Netflix CFO Spencer Neumann noted of the latest guidance: “It’s tough to say exactly why our acquisition hasn’t kind of recovered to pre-COVID levels. It’s probably a bit of just overall COVID overhang that’s still happening after two years of a global pandemic that we’re still unfortunately not fully out of, some macroeconomic strain in some parts of the world like Latin America in particular.”
That disappointment over slowing subscriber growth led to a flurry of analyst downgrades on Wall Street as market watchers took note of stepped up competition from rival streaming platforms like Disney+ and Amazon Prime.
“The dramatically soft Q1:22 subs adds guide of 2.5 million may simply reflect near-term headwinds — Omicron uncertainty, heightened churn in the wake of the North American price increase, a delayed content slate, and a longer than expected pull-forward of demand re: the Covid crisis,” wrote Evercore analyst Mark Mahaney in a Jan. 23 investor note. “But that guide may also reflect end market maturity, heightened competition, and a tougher than expected market ramp in Netflix’s newer international markets, particularly in Asia Pacific. Probably, all these.”
Netflix ended 2021 with in all 222 million paid subscribers, having added 18 million new paying subscribers during the year, against 37 million gained in 2020.
