Netflix lost nearly 1 million subscribers in the second quarter of 2022, but it’s excited about its future: Here’s why

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Netflix Inc on Tuesday touted its worst-case scenario of subscriber losses, plunging nearly 1 million from April to June, and predicted it would return to subscriber growth during the third quarter.

Shares are down about 67 percent this year on concerns about the company’s longer-term prospects, with results rising eight percent in after-hours trading. Investors took the forecast as a sign that Netflix could still find new subscribers, despite a rocky global economy and signs of saturation in its biggest markets, the United States and Canada.

The world’s largest streaming service said it plans to launch its ad-supported option next year. It also warned that a stronger dollar was impacting revenues booked from customers overseas.

The company said in April that it expected to lose two million subscribers in the second quarter, shocking Wall Street and growing concerns that the streaming TV boom had come to an abrupt end. Read more The deficit was almost half that, at 970,000.

Chief executive Reed Hastings said in a post-earnings interview on YouTube, “Our enthusiasm is muted, given that Netflix is ​​still losing subscribers. “But looking ahead, streaming is working everywhere… . We are very bullish on streaming.”

Hastings credits new episodes of the science-fiction series “Stranger Things” as the most-watched English-language show in Netflix history, helping prevent further defection.

According to analysts surveyed by Refinitiv, Netflix forecast a 1 million increase in subscriber count for July to September, while Wall Street analysts were expecting an average forecast of 1.84 million.

“The stock is up because the (analyst) downgrades have all taken a big deal out of the slow growth,” said Wedbush Securities analyst Michael Pachter, noting that Netflix was cutting costs and significantly increasing free cash flow next year. was expected to happen.

Shares of other streaming companies rose slightly after the Netflix report. Roku Inc.’s stock gained 2.7 percent, while Walt Disney Co and Paramount Global each gained about one percent.

After years of red-hot growth, Netflix’s fortunes turned as rivals including Disney, Warner Bros., Discovery and Apple Inc., invested heavily in their streaming services.

Netflix lost 1.3 million subscribers in the United States and Canada and 770,000 in Europe, the Middle East and Africa in the second quarter. This was offset by gains of approximately 1.1 million members in the Asia/Pacific region.

In a letter to shareholders on Tuesday, Netflix said it has conducted further investigation into the recent slowdown, which it attributed to a number of factors, including password sharing, competition and a sluggish economy.

The letter states, “Our challenge and opportunity is to accelerate our revenue and subscription growth while continuing to improve our product, content and marketing, as we have done for the past 25 years, and better serve our large audience.” way to monetize it.”

The company plans to earn more from members by limiting password-sharing. The company is testing two options in Latin America.

It’s also working to build on the popularity of “Stranger Things” and trying to turn some of its biggest successes into a franchise.

— netflix

The post Netflix lost nearly 1 million subscribers in Q2 2022, but it’s excited about its future: Here’s why it first appeared on BGR India.



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