Netflix shares down after lower-than-anticipated subscriber gains in Q4


• This comes after Netflix previously forecasted 8.5 million new subscribers

Netflix has fallen short with its lower-than-anticipated gain in subscribers at the end of 2021 which has resulted in a dive in stocks.

The streaming giants reported gain of 8.28 million subscribers in the fourth quarter, which came largely from markets outside of North America – brings the total number of subscribers to 221.8 million worldwide.

This comes after Netflix previously forecasted 8.5 million new subscribers following strong interest in the hit series hit series Squid Game back in September.

Shares for the streaming giant fell more than 18% in after-hours trading. It’s likely investors lost confidence when Netflix noted in their quarterly letter to shareholders that competition with rival streaming services “may be affecting our marginal growth.”

But they added: “We continue to grow in every country and region in which these new streaming alternatives have launched.

“This reinforces our view that the greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service.”

The company also forecasted net adds of 2.5 million for the first quarter of 2022 compared to 4 million in the same quarter in 2021

The Q1 subscriber guidance “reflects a more back-end weighted content slate”, this includes Bridgerton season two and Netflix original film The Adam Project, which will both be launched in March.

Netflix also told investors: “While retention and engagement remain healthy, acquisition growth has not yet re-accelerated to pre-Covid levels.

“We think this may be due to several factors including the ongoing Covid overhang and macro-economic hardship in several parts of the world like LATAM (Latin America).”

Netflix remains the undisputed leading streaming platform, with a 21% share of the US subscription video on demand (SVoD) market in 2021, although, GlobalData reports that the giant is showing signs of slowing.

Francesca Gregory, associate analyst at GlobalData, commented: “We have already started to see Netflix branching out to different areas, with the launch of Netflix Games in November 2021 and a co-streaming partnership with Twitch. Reaching different audiences will continue to be a key strategy. I wouldn’t be surprised if the company looked to experiment with more gaming streaming platforms in the future.

“Subscribers can look forward to having a more rounded service and seeing large franchises converted into shows. This may, at the same time, leave subscribers torn between different platforms.”

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