Netflix reported its earnings for the first quarter of 2022 yesterday. The company’s stock fell more than 23 percent on Tuesday on reports that it had lost 200,000 subscribers for the first time in ten years.
Netflix is a leading company in the video streaming space and following its report yesterday, shares of other video streaming companies fell in Tuesday’s extended trading. Shares of Disney, a budding Netflix rival were down as much as 5 percent on Tuesday. Shares of Warner Bros which owns and operates the streaming platform HBO Max were down 4 percent on Tuesday. Paramount shares were also down 6 percent while shares of Roku declined 6 percent in after-hours trading after almost soaring by 8 percent during regular trading hours.
Netflix’s report suggested declining consumer spending on video streaming platforms which increased investors’ fears. Netflix, however, blames pulling out from Russia and challenges such as password-sharing for its losses.
Netflix said that suspending in Russia cost it 700,000 subscribers and that if it didn’t shut down operations in Russia, it would have added 500,000 net subscribers in the first quarter. “Our revenue growth has slowed considerably … 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,” a Tuesday letter to shareholders read.
The company also added that it will take action against password sharing as it believes that this could help the company to raise its numbers. Netflix estimated that 100 million additional households are sharing accounts with its 222 million paying households. In the recent past, the company said that it will charge more for people who want to share their Netflix accounts in the future.
Netflix also blamed increasing competition from rivals such as Disney and Roku for some of the losses and challenges it faced in the quarter.
The company reported earnings per share of $3.53 surpassing the $2.89 that analysts had expected, according to Refinitiv. In the quarter, it reported a revenue of $7.78 billion falling short of an expectation of $7.93 billion from analysts, according to Refinitiv.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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