Netflix loses a quarter of its value after reporting a shocking figure for the first quarter
Netflix shares decline by more than 25% following the release of Q1 2022 earnings
The report was released after regular trading hours on NASDAQ where Netflix shares had risen by $10.75 or 3.18% to close at $348.61 per share. But once investors saw the first quarter results and the forecast for the current quarter, they dumped the stock taking it down to $259 for a loss of $89.61 or 25.70% in after-hours trading. Netflix also took down the shares of fellow streamers like Roku, Disney, and Spotify, all of which declined thanks to Netflix. For example, Disney stock, which rose $4.40 during regular trading hours, gave it back and more when the report was released.
In a letter to shareholders, Netflix wrote, “Our revenue growth has slowed considerably. Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds.”
Netflix expects to lose 2 million subscribers during the current quarter
During the first quarter of 2022, Netflix took in $7.87 billion, up 9.8% on an annual basis. Net income declined 5.9% from $1.7 billion to 1.6 billion during the first quarter. Diluted earnings per share slipped 5.8% to $3.53. For this quarter, Netflix sees earnings per share of $3.00.
The number of global streaming paid memberships declined from 221,840,000 to 221,640,000 from the 4th quarter of 2021 to the first quarter of 2022. Wall Street was expecting a 2.7 million increase in subscribers. The suspension of Netflix’s streaming service in Russia cost Netflix 700,000 subscribers. If not for that activity, Netflix would have reported an increase of 500,000 subscribers during the quarter.
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