streaming provider
Weak growth: Netflix stock plummets in after-hours trading
Netflix announced fourth quarter results on January 20, 2022. Photo: Jenny Kane/AP/dpa
© dpa-infocom GmbH
Despite hits like “Squid Game”, Netflix missed its growth target at the end of the year. The forecast for the current quarter is still vague. Investors are shocked.
The streaming market leader Netflix only expects weak user growth after the Corona boom. For the current quarter, the company expects only 2.5 million new customers, as announced on Thursday after the US stock market closed in Los Gatos.
Netflix remained well below the forecasts of the analysts. The stock fell about 20 percent in after-hours trading.
In the last quarter of 2021, the number of subscribers worldwide increased by a good eight million to a total of almost 222 million thanks to streaming hits like “Squid Game”. Financially things have also continued to run smoothly: In the final quarter, sales rose by 16 percent compared to the previous year to 7.7 billion dollars. The profit grew by around twelve percent to 607 million dollars (537 million euros).
Netflix experienced a veritable rush of customers, especially at the beginning of the pandemic, but growth has been slowing for some time. The streaming giant is facing stiff competition – rivals like Disney+, Hulu and HBO Max are upgrading, and new providers like Peacock and Paramount+ have joined the ranks. In the quarterly report, Netflix acknowledged that competition has intensified as entertainment companies around the world develop their own streaming services.
Netflix also justified the meager forecast for the current quarter with a few planned streaming premieres. For example, the new season of the hit series “Bridgerton” and the eagerly awaited science fiction blockbuster “The Adam Project” would only start in March. But even in the final quarter of 2021, when Netflix came up with many new series and films and promised its strongest offer to date, it just missed its own target of 8.5 million new customers.
Experts have long raised the question of whether the streaming business is heading towards saturation. Netflix is focusing heavily on its international expansion because of the modest growth prospects in established markets such as North America. Productions from South Korea have recently been particularly successful. Asia and Europe were the most important markets for Netflix in 2021, each with over seven million new users. In the US and Canada, just over a million new customers were added.
Netflix’s bleak business outlook also put a lot of pressure on the shares of other streaming providers after the hours. Entertainment giant Walt Disney fell by around five percent at times, and Roku – the leading US manufacturer of streaming devices – even by over six percent. The parent company of Netflix competitor Paramount+, ViacomCBS, and the live sports streaming service FuboTV also suffered significant price losses.