Netflix: disappointment on new subscribers, the title plummets

Posted 21 January, 2022

Netflix announced Thursday evening after the Wall Street close that it had added 8.3 million new subscribers to its streaming video services in the 4th quarter of 2021, bringing its total number of subscribers to 221.8 million, in line with expectations. of Wall Street.

On the other hand, the American group was much more pessimistic than expected for the start of 2022, which caused the Netflix title to plunge by almost 20% in the pre-session electronic quotations, this Friday on the New York Stock Exchange.

For the first quarter of 2022, Netflix management said it expected 2.5 million new paying subscribers, less than half of what analysts had hoped for. The consensus of the firm FactSet thus counted on 5.8 million new subscribers in the 1st quarter.

Post-Covid hangover longer than expected

In a letter to shareholders, the management explains, in particular, its conservative forecasts by the late release, scheduled for March, of several new productions, including season 2 of "Bridgerton" and the film "The Adam Project". Although retention and engagement rates remain high, the pace of new customer acquisition has not returned to its pre-Covid crisis pace, the group said. “We think this could be due to several factors including the longer than expected aftershock of the pandemic, and the macro-economic difficulties that persist in several parts of the world”

The pace of subscriptions, which had soared in 2020 with the health confinements linked to the Covid-19 crisis, slowed in 2021. Netflix thus acquired 18.2 million new subscribers over the whole of 2021, less than the increase of the first half of 2020 alone, during the confinements.

Earnings above expectations in the 4th quarter

As for the fourth quarter of 2021 accounts, Netflix reported a 17% increase in sales to $7.71 billion, a figure in line with analysts' expectations. Profits reached $607 million, or $1.33 per share against $1.19 a year earlier (+11.7%), which is much higher than the consensus, which was expecting only 0.83 $ per share.

In addition to the improvement in the global health situation, Netflix, a pioneer in streaming video subscriptions, has been faced for two years with increasing competition from, in particular, HBO (a subsidiary of AT&T), Apple, Walt Disney, Amazon, Comcast, and ViacomCBS.

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