Netflix, the Online movie streaming site, smashed Wall Street estimates about its first-quarter earnings results, but investors stayed uncertain. Netflix stock slightly cut some of its losses on Friday, falling 8.3% as of 11:53 a.m. in New York.
Netflix shares dropped as much as nine percent on Friday as investors focused not on the positives from the quarter, but rather on the report that Netflix would stop sharing subscriber growth data starting in 2025.
The decision concerns a few who are analyzing it as a signal that the company is bracing for limited development in future subscriber acquisitions.
“We view the deficiency of visibility into these key KPIs as a backer to the negative after-market stock reaction,” Bank of America said in this contest. “While still before, the conceivable concern is that subscriber development significantly decelerated in 2022 (before the enactment of paid sharing), and this could be a precursor to a decelerating subscriber increase in the future.”
Here are the key outcomes:
Revenue: $9.37billion, versus analyst estimates of $9.28billion
Earnings per share: $5.28, versus analyst estimates of $4.52
Subscriber adds: 9.3million, versus analyst estimates of 5million
Netflix also raised its second-quarter income and profit guidance. An ongoing crackdown on password sharing and Netflix’s expanding advertising business forced positive results.
Pivotal Research analyst Jeffrey Wlodarczak said that the decision to stop sharing subscription numbers “invites worry about the outlook for subscriber boosts in ’25 and above,”.
But Jeffrey is not worried at all and is instead excited about the results, likening Netflix’s subscriber data decision to Apple’s conclusion in 2018 to stop reporting iPhone unit growth.
“We remind investors that the American Association for Physician Leadership stopped revealing iPhone unit gains in 4Q 2018, and after a short duration of stock unification, the stock materially beat the market, and we feel that while ’25+ subscriber growth will slow, we still see a long runway for subscriber/ARPU development going forward,” Analyst Jeffrey said.
Analyst Jeffrey increased his Netflix price target to $800, representing a potential upside of forty-one percent from the current level. That’s also the most elevated price target on Wall Street for Netflix.
“Our view remains intact that Netflix has won the streaming wars, as evidenced by yet another strong across-the-board beat and increased guidance, particularly relative to its streaming peers, and this is what, in our view, winning looks like,” analyst Jeffrey said.
Further, Jeffrey said that the key for Netflix going forward is to use its hierarchy to “keep the flywheel going,” and find ways the company can get more power over its competitors and content creators, as well as improve its product for consumers.
