Netflix stock price: Netflix’s gloomy forecast erases much of the stock’s pandemic gains

LOS ANGELES: Netflix Inc dashed hopes of a quick rebound after forecasting weak first-quarter subscriber growth on Thursday, sending shares tumbling nearly 20% and wiping out most of its remaining pandemic-fueled 2020 gains .

The world’s largest streaming service plans to add 2.5 million customers from January to March, less than half of the 5.9 million analysts predicted, according to data from Refinitiv IBES.

Netflix tempered its growth expectations, citing the late arrival of expected content, such as the second season of “Bridgerton” and Ryan Reynolds’ time travel film “The Adam Project.”

Shares of Netflix fell nearly 20% to $408.13 in after-hours trading. Competitor Walt Disney Co, which has staked its future on building a strong streaming business, saw its shares fall 4%. Streaming device Roku Inc fell 5%.

Nasdaq futures fell nearly 1%, showing traders expect the tech-heavy index to open lower on Friday.

Netflix added 8.3 million customers from October to December, when it released a wide range of new shows, including star-studded films ‘Red Notice’ and ‘Don’t Look Up’ and a new season of ‘ The Witcher”. Industry analysts had forecast 8.4 million.

The company’s total global subscriber count at the end of 2021 reached 221.8 million.

In a letter to shareholders, Netflix said it believes the ongoing COVID-19 pandemic and economic difficulties in several parts of the world such as Latin America may have prevented subscriber growth from rebounding to levels seen before the pandemic.

COVID “created a lot of bumps” that made it difficult to project subscriber numbers, “but all the fundamentals of the business are pretty solid,” co-CEO Ted Sarandos said in a post-earnings video interview. .

The company posted adjusted earnings per share of $1.33, smashing analyst consensus estimates of 82 cents. Revenue reached $7.71 billion, as estimated.

Netflix last week hiked prices in its biggest market, the United States and Canada, where analysts say growth is stalling, and is now looking for growth overseas.

The company has been on a rollercoaster ride during the pandemic, with strong growth in early 2020 when people stayed home and movie theaters were closed, followed by a slowdown in 2021. Netflix attracted more than 36 million customers in 2020 and 18.2 million in 2021. .

Netflix’s subscriber growth in 2022 was expected to level off and return to the pace seen before the pandemic, when it added 27.9 million subscribers in 2019, analysts said. The company’s upcoming slate includes new episodes of “Ozark” and “Stranger Things” and a three-part documentary about Kanye West. “The pandemic shutdowns have pushed tons of demand forward and it’s taking longer than expected to normalize,” said Jeff Wlodarczak, analyst at Pivotal Research.

Competitors including Disney and AT&T Inc’s HBO Max are pouring billions into creating new programming to grab a slice of the streaming market.

Netflix said competition “could affect our marginal growth,” but added it continues to grow in all countries where new streaming options have launched.

“Even in a world of uncertainty and increasing competition, we are optimistic about our long-term growth prospects as streaming supplants linear entertainment globally,” Netflix said in its shareholder letter.

In their video interview, the executives sought to reassure investors that Netflix’s long-term outlook is bright. Sarandos said the service hasn’t seen a decline in customer engagement or retention and he expects the shift to streaming from traditional TV will continue to open up opportunities around the world. The stock remained down nearly 20%.

“The pace of migration can be a bit difficult to gauge from time to time when there are very global types of events or even local conditions,” Sarandos said, “but it absolutely happens. no doubt.”

The company is looking for new ways to attract customers, especially with mobile video games. Netflix said it released 10 games in 2021, was happy with the early reception, and would expand its games portfolio in 2022.

Karen J. Nelson