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After a lousy fourth quarter that sank its share price, Netflix is set to report its first quarter earnings on Tuesday. Unfortunately, few on Wall Street believe this new report will shift the gloomy narrative currently surrounding the streaming giant.
Netflix was already planning to see a drop in new customers going into the first quarter. In December, the company predicted that it would add 2.5 million subscribers from January through March—down from 4 million in the same period last year. Management partly blamed the relatively meager growth forecast on the fact that hit shows like “Bridgerton” wouldn’t air until late in the quarter, as well as lasting economic hardships caused by COVID-19.
But that was before Netflix suspended service in Russia after the country’s invasion of Ukraine, likely losing north of 1 million subscribers as a result. Some analysts are now forecasting as few as 1.45 million net additions when accounting for the subscribers Netflix lost due to pulling out of Russia. Others are more optimistic and projecting upwards of 3 million new subscribers, which would exceed the company’s own expectations
While Netflix could surprise Wall Street, there are many signs that the company is still coming to terms with its subscriber slowdown. The streaming service announced another price hike on U.S. customers in January—a move seen by some observers as a way to squeeze revenue out of existing users as it struggles to add new ones. Even the company’s crackdown on password sharing can be viewed as Netflix turning over the sofa cushions to find loose change. (Executives have also reportedly warned staff to be careful about their spending, according to The Information.)
“Netflix is a frequent topic in our discussions with investors,” JPMorgan analyst Doug Anmuth wrote in a recent report to clients. “Shares remain controversial and sentiment skews negative.”
After initially being caught flat-footed by the rise of streaming, legacy media players like Disney and the newly-merged Warner Bros. Discovery have recently gained ground on Netflix. In a letter to shareholders in January, Netflix’s management acknowledged that the competition “has only intensified.” Still, the company insists that it still has plenty of runway for growth as consumers continue to flee traditional cable TV for online streaming platforms.
“With under 10% of total TV screen time in the U.S., our biggest market, Netflix has tremendous room for growth if we can continue to improve our service,” the letter said.
With few expecting strong results this time around, the most important details in Tuesday’s earnings will likely be the company’s guidance for the future. Wall Street expects Netflix to forecast roughly 2.5 million net subscriber adds in the second quarter, according to Barron’s—despite the April-through-June period being a historically weak one for the company.
What gives? As ever, it comes down to the content: Next month will bring season four of one of Netflix’s not-so-secret weapons, the hugely popular fan favorite “Stranger Things.” — Christian Hetrick
The streaming giant will release “Exploding Kittens - The Game'' on mobile devices in May and follow that with an “Exploding Kittens” adult animated comedy series in 2023. It’s the first time that Netflix will launch a mobile game and adapt it into a TV series.
A former TikTok employee has criticized the social media firm’s workplace culture—claiming that managers would pressure employees to work long hours and weekends in a nod to China’s “996” culture.
Stem, a music tech startup that looks to help artists with distribution and payments, has raised $20 million in a new funding round backed by QED Investors and Jack Dorsey's Block.
Rivian CEO RJ Scaringe said the auto industry will face challenges procuring the materials needed to build enough batteries for the large-scale adoption of electric vehicles—including valuable resources like nickel, cobalt and lithium.
On this episode of Behind Her Empire, The Flex Co. founder and CEO Lauren Wang discusses how she came to view herself as an entrepreneur and take on the menstrual products industry.
What We're Reading Elsewhere...
- Apple TV may soon be the home of NFL Sunday Ticket.
- Aerospace accelerator Starburst has opened applications for the first annual Care in Space Challenge.
- Google is teaming with the NBA to host a “virtual” Pixel Arena.
- Real estate company Crexi is expanding its audience with a mobile app now available for Android users.
- Kalos Labs announces its first Web3 bridge activation to develop a unique NFT collection.