Analysts across the board have reduced their price targets and growth estimates for the global streaming company. The revenue in the first three months of the year was $7.87 billion, a little lower than the expected $7.95, and the earnings per share came at $3.53 vs. the expected $2.91. However, what shocked investors was a drop of 200k subscribers worldwide, while the market expected an increase of 2.51 million.
Company’s Co-CEO Reed Hastings explained what was behind the tragic first-quarter numbers: “We’re working on how to monetize sharing. We’ve been thinking about that for a couple of years, but when we were growing fast, it wasn’t a high priority to work on. And now we’re working super hard on it. And remember these are over 100 million households that already are choosing to view Netflix. They love the service, we just got to get paid.”
What’s even worse, the Netflix board is expecting an even faster decline in subscriptions caused by increased competition. The company estimates as many as 100 million subscribers share their passwords with friends and family, and Netflix is expected to tackle this problem in the nearest future.
The streaming company was supposedly also hit by withdrawing from Russia in March as a response to the invasion of Ukraine. The move cost them 700k subscriptions. Other 600k accounts were canceled in the US and Canada after raising subscription prices. The company estimates that inflation might have made the streaming service less available.
Finally, Elon Musk made a comment on the results, tweeting: “The woke mind virus is making Netflix unwatchable.”
Netflix went up 3.12% yesterday, so make sure you are ready when the trading starts at 15:30 UTC.