20 January Netflix reported for the fourth quarter of 2021. The results were slightly better than expected., but the company gave a weak outlook for the next quarter. In the post-market, shares fell by 20%, to 406 $.
Quarterly results and forecasts
Here's how percentage-wise Netflix's performance changed year-over-year, and here's what analysts were expecting:
- revenue - 7,71 (+16%) vs. $7.71 billion;
- earnings per share - 1,33 (+12%) against 0,82 $;
- subscribers - 221,84 (+9%) against 221.75 million.
Netflix added 8.28 million new subscribers in the fourth quarter. For comparison: in the third quarter, the company forecast an increase of 8.5 million, analysts — by 8.19 million people.
Netflix estimates, in the first quarter of 2022, revenue will grow by 10%, up to $7.9 billion, and 2.5 million people will subscribe to the service. Analysts expected 6.93 million new users.
According to Netflix, one of the reasons for the slow growth is high competition from other services. The company has previously stated, that start services, e.g. Apple and Disney, will have little effect on growth..
“Consumers have always had a wide choice, but in recent 24 month, competition intensified. All this can affect our dynamics, although we continue to grow in all countries and regions", Netflix said.
And the service a week ago raised the cost of a monthly subscription in the US and Canada: basic - with 8 to 9 $, standard - with 14 to 15,5 $, premium subscriptions - from 18 to 20 $. This will help increase revenue from the current user base., but it definitely won't help to cope with the slow influx of new subscribers.
What about stocks
Netflix is not a cheap company, in the value of which investors include expectations of future growth. Until recently, the company was valued at 47 annual profits and 8 annual proceeds.
Shares of expensive companies have been falling in recent months. Investors fear imminent tightening of policy FED, which has driven stock markets up in recent years. Taking into account the premarket, Netflix shares have already fallen in price since November 2021 42%, from 701 to 406 $.
