Open Books: Netflix Stocks Down 25 Percent After Hours: Netflix Profits Drop – Lost Customers | news

Streaming market leader Netflix had to cope with a quarter of customer decline for the first time in more than a decade. In the three months to the end of March, around 200,000 paid subscriptions were lost, Netflix announced on Tuesday (local time) after the close of the US stock market. Overall, the number of users worldwide fell to 221.6 million at the end of the quarter. Netflix was actually expecting 2.5 million new customers. In addition to increasing competitive pressure, the fallout from the war in Ukraine also had an impact on the streaming giant’s bottom line.

Netflix posted earnings per share of $3.53 in the latest quarter. In the same period a year earlier, the streaming provider had posted earnings per share of $3.75, analysts now expected earnings per share to decline to $2.92.

Netflix’s quarterly revenue of $7.87 billion fell short of analyst forecasts of $7.94 billion. In the same period last year, Netflix had a turnover of 7.16 billion US dollars.

Investors reacted hugely disappointed: shares came under heavy pressure after the trading day and lost 25.73 percent to $258.90. At the beginning of the corona pandemic, Netflix was still considered one of the big winners of the crisis, but it has been struggling on Wall Street for a long time. Since the beginning of the year, the share price has already fallen more than 40 percent. The quarterly report also gave shares of other streaming providers such as Walt Disney, Roku and FuboTV a significant boost in after-hours trading.

Among other things, Netflix blamed the withdrawal from Russia, where all customer accounts were deactivated due to the aggressive war against Ukraine, for the weak figures. According to the company, around 700,000 subscriptions were lost to the measure on a quarterly basis. Without this effect, there would have been an increase of half a million users. Netflix also explained that the statistics are affected by the multiple use of customer accounts, since many subscribers share their passwords. The company estimates that around 100 million households around the world use the streaming service without paying.

However, the biggest impact on the financial market was the business outlook. It was particularly bad that Netflix also expected to lose subscribers in the current quarter, given the growing competition for streaming. And this time, the problem with around two million customer accounts should be even more serious. With new seasons of hit shows like “Stranger Things” and top-tier movies like “The Gray Man” with Hollywood star Ryan Gosling, Netflix has solid productions up front.

To get growth going again, Netflix could even ditch one of its biggest taboos in the future and introduce a cheaper streaming subscription with interspersed commercials. There’s never been anything like this at Netflix – CEO Reed Hastings had little time for it until now. Without laying out any concrete plans, he was suddenly open, explaining that an ad-supported offer could make “a lot of sense.” Netflix wants to work on such a solution in the next year or two.

The last time Netflix had a quarter of declining subscribers was in October 2011. Despite the recent drop, Netflix remains far ahead of its peers. For comparison: Big rival Disney+ had almost 130 million customers at the end of 2021. But Netflix also had to cut profits last quarter. The surplus fell from a year earlier by about 6 percent to $1.6 billion (€1.5 billion). Although sales rose about 10 percent to $7.9 billion, they still fell short of analysts’ average expectations.

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