Netflix Inc (NASDAQ:NFLX) forecasts weak first-quarter subscriber growth

Netflix Inc (NASDAQ:NFLX) stock rose 20.81% (As on Jan 21, 11:53:50 AM UTC-4, Source: Google Finance) after the company dashed hopes for a quick rebound after forecasting weak first-quarter subscriber growth, sending shares sinking nearly 20% and wiping away most of its remaining pandemic-fueled gains from 2020. The world’s largest streaming service projected it would add 2.5 million customers from January through March, less than half of the 5.9 million analysts had forecast, according to Refinitiv IBES data. Netflix said it believes the ongoing COVID-19 pandemic and economic hardship in parts of the world such as Latin America may have prevented subscriber growth from returning to pre-pandemic levels. Netflix tempered its growth expectations, driven by the late arrival of anticipated content, such as the second season of “Bridgerton” and the Ryan Reynolds time-travel movie “The Adam Project.” Netflix added 8.3 million customers from October to December, when it released a heavy lineup of new programming including the star-studded movies “Red Notice” and “Don’t Look Up” and a new season of “The Witcher.” Industry analysts had projected 8.4 million. The company’s global subscriber total at the end of 2021 reached 221.8 million.

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

NFLX in the fourth quarter of FY 21 has reported the adjusted earnings per share of $1.33, beating the analysts’ estimates for the adjusted earnings per share of 82 cents. The company had reported the adjusted revenue growth of 35.9 percent to $7.71 billion in the fourth quarter of FY 21, which is inline with the analysts’ estimates for revenue of $7.71 billion.

Netflix’s subscriber growth in 2022 had been expected to stabilize and return to the pace logged before the pandemic, when it added 27.9 million subscribers in 2019, analysts say. The company’s upcoming slate includes new installments of “Ozark” and “Stranger Things” and a three-part Kanye West documentary. “The pandemic lockdowns pulled forward tons of demand and it is taking longer than expected to normalize,” said Pivotal Research analyst Jeff Wlodarczak.

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

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