Netflix Stock falls 20% after a disappointing report



2021/01/21

Netflix Stock falls 20% after a disappointing report

Netflix, golden times of Covid lockdowns over? Stock falls 20% on Wall Street after disappointing report.

For Netflix, the golden times experienced in the darkest period of Covid seem long gone, as was predictable. The streaming giant was confirmed as one of the winners of the pandemic, benefiting from the various measures of restrictions, culminating in a lockdown and a 'stay at home' diktat and launched especially in 2020 and early 2021, in order to stem the spread of the virus.

In those months, millions of consumers around the world, forced to stay in their homes, found other ways to spend their free time: and the boom in subscriptions to Netflix, as well as to other indoor entertainment services, flew. But that period has passed.

With the arrival of vaccines, consumers have rediscovered outdoor activities and the 'reopening' stocks have prevailed, in spite of the 'lockdown' stocks.

The numbers of the latest Netflix quarterly confirm the end of the golden period, already taken into account.

Also pay attention to the comparison with the budget of the third quarter, when the expectation for Squid Game was very high, the Korean television series that in a few days after its landing became a sort of global obsession, amusing adults passionate about the genre and making the hair for fear at several parents.

In this regard, co-CEO and head of the content unit Ted Sarandos revealed that the second season of the series will be: "Absolutely", he said in response to a question: "The Squid Game universe has begun" .

Squid Game is confirmed as the most watched television series in Netflix's history.




Netflix: disappointing report $45 billion lost

It is the outlook that Netflix issued, at the same time as the publication of the quarterly, which disappointed the market, already displaced by the numbers relating to the growth of subscribers during the fourth quarter of 2021: the worst is that, for the first quarter of 2022, the American streaming giant estimates a slower-than-expected growth in subscribers.

The reaction of the Netflix stock, which collapsed in afterhours trading on Wall Street by 20%: a decline that, a MarketWatch article points out, means that a capitalization of almost $ 45 billion has gone up in smoke, on a total market value that, at the end of yesterday's trading day, it was over $ 225 billion.

It is worth underlining in this regard that the Netflix stock has lost more than 12% over the last 12 months, clearly underperforming the S&P trend which, over the same period, has grown by 17%.

But let's get to the key numbers, those of the growth of new subscribers in the fourth quarter and in the whole of 2021: in the fourth quarter of 2021, the number of Netflix subscribers grew on a net basis by 8.28 million units, better than the growth of 8.19 million estimated by analysts. However, the number falls short of Netflix's growth of 8.5 million subscribers exactly the previous year, in the fourth quarter of 2020.

In addition, in the whole of 2021, the growth was 18.2 million new subscribers, less than half of the new subscribers that Netflix had managed to attract in the first six months of 2020.

The outlook is disheartening: for the first quarter of 2022, the group expects an increase in new subscribers, on a net basis, of just 2.5 million units, definitely below the 3.98 million new subscribers of the first quarter of 2021, and even worse than the +6.93 million expected by analysts, according to StreetAccount estimates. The analysts interviewed by FactSet had expected an even higher number, equal to +7.25 million subscribers.

There is, in fact, a justification, and it has been given by the same leaders of the American giant: if during the period of the Christmas season, the giant has uploaded new content, including the new seasons of some popular TV series, such as " The Witcher ", and" Emily in Paris ", also adding important films, such as" Don't look up "and" Red Notice ", for the first quarter of 2022 no big news are expected.

In a letter to shareholders, the company admitted that the "guidance reflects a more thoughtful content selection for the backend (for example, 'Bridgeton' 52 and the new original new film 'The Adam Project' will both be launched in March. ) ".

Netflix also noted that "although loyalty and engagement are in good health, the growth in acquisition (traffic) has not yet accelerated to pre-Covid levels". And "we believe that this may be due to various factors, such as the continuing persistence of Covid and the macro-economic difficulties in various parts of the world (particularly in Latin America).




Netflix: 2021 revenue + 19% to $ 30B, operating profit + 35%

Regarding the numbers for the whole of 2021, in the financial statements released by Netflix we read that "the turnover of the whole year, equal to $ 30 billion, marked a growth of 19% on an annual basis, while the operating profit stood at $ 6. , 2 billion, up by 35% on an annual basis ".

In all, the group "completed the fourth quarter with a number of subscribers of 222 million (with an addition of 8.3 million in the fourth quarter)".

In the fourth quarter of 2021 alone, Netflix reported earnings of $ 607 billion, or earnings per share of $ 1.33, doing far better than the 82 cents per share expected by analysts surveyed by Refinitiv, and up from $ 1.19 per share. for the same period of the year 2020. Revenue stood at $ 7.71 billion, as predicted by the consensus, up 16% yoy, compared with an operating margin amounted to 8%, down six percentage points on an annual basis. In the whole of 2021, the operating margin grew to 21% from 18% in 2020.

The giant commented on the results stating that, "even in a world of uncertainty and growing competition, we are optimistic about our long-term growth prospects, with streaming continuing to supplant linear entertainment around the world. to improve Netflix so that we can satisfy our customers, and to drive this transition. "

Regarding the increasingly fierce competition from its rivals, the company admitted that this was a contributing factor to the slowdown. That said, Netflix has also said in the past that competition from Apple and Disney "was not going to have a major effect on its growth."

"Consumers have always had many choices regarding how to spend their free time, and the competition has only intensified over the past 24 months, with entertainment companies around the world developing their own streaming offerings - had the group specified - Although increased competition may affect our growth in some way, we continue to grow in each country and region where these new streaming alternatives have been launched. "

A few days ago Netflix stood out for announcing that it raised the monthly cost of its basic subscription in the United States and Canada by $ 1 to $ 9.99.

The cost of the premium plan has been raised from $ 17.99 to $ 19.99, while the standard subscription now costs $ 15.49, up from $ 13.99 previously.

Michael Zippo
https://linkedin.com/in/michael-zippo-9136441b1
[email protected]

Sources: Finanza.com





Business books: Top Picks

1
ITIL 4 Foundation PDF
ITIL v4 PDF Publisher: Axelos The ITIL v4 Foundation book by AXELOS

2
Business Model Generation book
Business Model Generation By Alexander Osterwalder, Yves Pigneur

3
The Intelligent Investor PDF
The Intelligent Investor Publisher: Collins Business Essentials

4
Investment Banking: Valuation, Leveraged Buyouts and Mergers and Acquisitions
Rosenbaum and Pearl PDF Publisher: Wiley

5
Fundamentals of Corporate Finance PDF
Fundamentals of Corporate Finance Publisher: Collins Business Essentials



Best Business Management books

#1ITIL Foundation: 4th edition

The fourth edition of ITIL (IT Infrastructure Library) was presented by Axelos in February 2019. The ITIL v4 (PDF and other versions available) focuses on practical aspects of IT management and provides a holistic approach with emphasize on Agile, DevOps and digital transformation topics.

#2Money master the game

Like all great adventurers, we’ll start by getting oriented for the trip. In chapter 1.4, you’ll learn more about the psychology of wealth, what holds us back, and some simple cures. You’ll uncover what it is you’re really investing for, and unleash the power of the best financial breakthrough strategies. Then, in the […]

#3The Subtle Art of Not Giving a Fuck

The Subtle Art of Not Giving a F*ck: A Counterintuitive Approach to Living a Good Life. In this generation-defining self-help guide, a superstar blogger cuts through the crap to show us how to stop trying to be “positive” all the time so that we can truly become better, happier people. For decades, we’ve […]

#4Read People Like a Book

Read People Like a Book: How to Analyze, Understand, and Predict People’s Emotions, Thoughts, Intentions, and Behaviors (How to be More Likable and Charismatic).

#5Fundamentals of Corporate Finance

Fundamentals of Corporate Finance 13th Edition (International Edition). This book was designed and developed explicitly for a first course in business or corporate finance, for both finance majors and non-majors alike. In terms of background or prerequisites, the book is nearly self- contained, assuming some familiarity with basic algebra and accounting concepts, while […]

#6The Intelligent Investor

One of the greatest investors of the twentieth century, Benjamin Graham, proposed his philosophy of “value investing” that could protect investors from dramatic errors and teaches them to develop long-term strategies. This approach is exhaustively explained in The Intelligent Investor (PDF download available) book, which remains the stock market bible since its first […]

#7How Money Works

Money is the oil that keeps the machinery of our world turning. By giving goods and services an easily measured value, money facilitates the billions of transactions that take place every day. Without it, the industry and trade that form the basis of modern economies would grind to a halt and the flow […]

#8Business Communication

Everyday Business Storytelling: Create, Simplify, and Adapt A Visual Narrative for Any Audience. Communication is one of the basic functions of management in any organization and its importance can hardly be overemphasized. It is a process of transmitting information, ideas, thoughts, opinions and plans between various parts of an organization. Good and effective […]

#9How Business Works

Every type of business has to choose an ownership structure. Although there are variations globally, most countries offer similar types of legal entities, from a single- person private enterprise to a massive organization trading on a stock exchange. There are three key considerations: how big the venture is expected to grow; the complexity […]

#10Business Model Generation

It’s a book for the Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (The Strategyzer series). Business Model Generation book provides practical tools for understanding, designing, and implementing a new business model or revamping an old one, co-created by 470 professionals from 45 countries and now practiced by millions around […]


Best books for entrepreneurs


#11The Essential Manager’s Handbook

The step up to a managerial role can be an exciting, but daunting, new challenge. Suddenly, you are responsible for making sure your team is working together, achieving results, and that overall your department is running smoothly. There is no single technique to becoming an excellent manager, but the Essential Manager’s Handbook provides […]

#12Operations Management

Operations Management is important, exciting, challenging, and everywhere your look! Important, because it’s concerned with creating all of the products and services upon which we depend. Exciting, because it’s at the centre of so many of the changes affecting the world of business. Challenging, because the solutions that we find need to work […]

#13Where Are the Customers Yachts

In 1940 Fred Schwed, a stockbroker whose father had lost everything as a short seller on Wall Street during the Roaring Twenties, published this timeless classic on how the stock market really works. Schwed, a pleasure-loving, cultured man who had been expelled from Princeton University in his final year for entertaining a lady […]

#14Corporate Finance 11th Edition

Corporate Finance, Eleventh Edition This book has been written for the introductory courses in corporate finance at the MBA level and for the intermediate courses in many undergraduate programs. Some instructors will find our text appropriate for the introductory course at the undergraduate level as well.

#15ISE International Business: Competing in the Global Marketplace

The 13th edition provides a complete solution that is relevant (timely, comprehensive), practical (focus on applications of concepts), integrated (integrated progression of topics) and the most up-to-date on the market. Available with Connect: Our highly reliable homework and learning management solution that embeds learning science and award-willing adaptive tools to improve student results.

#16Winning: The Unforgiving Race to Greatness

Winning: The Unforgiving Race to Greatness (Tim Grover Winning Series) From the elite performance coach who wrote the international bestseller Relentless and whose clients included Michael Jordan, Kobe Bryant, and Dwyane Wade, comes this brutally honest formula for winning in business, sports, or any arena where the battle is relentless.

#17Your Next Five Moves: Master the Art of Business Strategy

From the creator of Valuetainment, the number one YouTube channel for entrepreneurs, comes a practical and effective guide for thinking more clearly and achieving your most audacious business goals. Both successful entrepreneurs and chess grandmasters have the vision to look at the pieces in front of them and anticipate their next five moves. […]

#18Your Next Five Moves

Your Next Five Moves: Master the Art of Business Strategy (Hardcover / Audio / Kindle). Creator of Valuetainment, the # 1 YouTube channel for entrepreneurs and “one of the most exciting thinkers” (Ray Dalio, Principles author) in business today, provides a practical and effective guide to thinking more clearly and getting the most out […]

#19Finding the Winning Edge

When those who chronicle the history of the game list the individuals who had the greatest impact on the National Football League, Bill Walsh will clearly be among the names of Halas, Lombardi, Brown, Landry, Noll and Shula. But when you consider who has impacted the game most in terms of those who […]

#20International GAAP 2020 2021

Generally Accepted Accounting Practice under International Financial Reporting Standards. The content of this book takes into account all accounting standards and other relevant rules issued up to September 2020. Consequently, it covers the IASB’s Conceptual Framework for Financial Reporting and authoritative literature listed below. References in the main text of each chapter to […]