Netflix & No Chill

This will be my second time covering Netflix after an earnings report and not much has changed. In the last post, I discussed the potential safety investor Bill Ackman granted after taking a 20% stake in the company. The stake offered retail investors a chance to tag along with the “big boys” and have a somewhat safe investment in a risky market. As of  Wednesday morning, Ackman’s Netflix holding sits at a $400 million unrealized loss as the stock continues to plummet. It turns out that he may be wrong and stocks do not go up after you raise your subscription price. 

On April 19th, 2022 the video streaming service reported its earnings following the market closed. The stock gained 3.18% on the day but it was short-lived. The stock plunged 30% after the company reported a loss of 200,000 subscribers during the first quarter. “Netflix is forecasting a global paid subscriber loss of 2 million for the second quarter.” (CNBC) Who could’ve seen this coming? In early January the company reported its plan on raising subscription prices to “offer a wide variety of quality entertainment options. As always we offer a range of plans so members can pick a price that works for their budget.”(CNN) These budgets include poorly cast baking shows that are just rebrands of each other, The Office, Big Mouth, and C list romcoms that flood your home screen. Netflix will release one good show every few months and tell you they’re changing the game while other streaming services such as Apple Tv and HBO Max begin to focus on quality over quantity. The company won’t discuss its studio quality but in a letter to shareholders, they stated “Our revenue growth has slowed considerably,” the company wrote in a letter to shareholders Tuesday. “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 also points the finger at Russia, password sharing (shocker), and the threat of competition with Disney+, Apple TV, HBO Max, Hulu, Peacock, and other services on the rise. Netflix’s earnings performance has maintained the same routine and yesterday’s performance may damper expectations for other tech giants and grant hope for other streaming services like Disney & Roku.