In 2022, Netflix lost more customers than it gained. It has lost $185 billion in worth as well as cachet and staff.
Netflix really was a joke last week. During Tuesday’s Disney upfront, Jimmy Kimmel joked through Zoom, “Every year I say ‘Fuck Netflix,’ and this year it came true. It’s difficult to keep track of how much more Netflix has lost over the past month or two than just its pride. Let’s try.
Part 1 of subscribers: -200,000. In the first quarter of 2022, the massive streaming service lost 200,000 paid customers globally, marking its first decline in ten years. Some of this was brought on by the attack of Ukraine’s infrastructure in Russia.
Part 2 of Subscribers: -2 million. However, the main reason is that Netflix is recognizing a rapidly developing market in the United States and Canada, where the firm lost 600,000 customers. By the time Netflix reports second-quarter (April-June) earnings in July, it expects to have lost another 2 million customers due to the abrupt impact of that not-so-sudden reality. By 2025, 280 million global paying members were predicted by MoffettNathanson media analysts; as of Q1 2018, Netflix had almost 222 million subscribers.
NFLX stock price is down 47%. The surprising unexpected loss and impending bigger loss caused Netflix stock (NFLX) to plunge by 35% over night (and as a result of that, Netflix got sued by a group of shareholders). The firm, whose share price momentarily exceeded $700 in the fall, eventually saw its price drop to as low as $162.71. NFLX shares were going for slightly under $184 per at the time of writing. With a target price of $245, MoffettNathanson still rates Netflix shares as “neutral.” They consider it to be a good deal, but not quite enough to label it a “buy.”
Market Cap: -$68 billion. Another (depressing) way to look at it is that Netflix had a value of over $300 billion in mid-November and as low as $73.91 billion earlier this month. When the Q1 data were released in the afternoon on April 19 and the stock market reopened on April 20, Netflix suffered an overnight loss of approximately $55 billion. The market value of the publicly traded company climbed back over $80 billion last week.
Imperceptible prestige. Netflix has also lost credibility in addition to all of that money. The market has lost faith, and the streamer has lost his confidence. Until it wasn’t, Netflix was regarded as being invincible.
-150 employees. 150 people were let go by Netflix one week ago today, and more layoffs are anticipated. A Netflix representative said at the time, “As we stated on results, our slowing revenue growth implies we are also needing to slow our cost growth as a company.” “Unfortunately, we are laying off 150 workers today, principally those situated in the United States. These adjustments are particularly difficult because no one wants to say goodbye to such wonderful coworkers, even if they are mostly motivated by business needs rather than individual performance. We are making a lot of effort to support them during this really challenging adjustment.
Initiatives: Animation. Netflix loss has resulted in the cancellation of a number of animated films as a result of all those failures, including “Wings of Fire” by Ava DuVernay, “Pearl” by Meghan Markle, “Bone,” “Antiracist Baby,” “With Kind Regards from Kindergarten,” and “Stamped: Racism, Antiracism, and You.”
The Repair What then is Netflix trying to fix everything? It’s attempting to make money off of the password-sharing issue. Additionally, it intends to introduce advertising, a hitherto sacrilegious idea, for the first time ever. While an AVOD tier will generate less cash from subscriptions overall, it will provide a second revenue stream that is much required.
Globally, that trade-off will benefit Netflix: Current and future members in less developed countries will see an instant increase in ARPU (average revenue per user). Currently, Netflix only earns cents on the dollar from customers in India and certain African countries, where people are much more ready to endure advertising than we are.
Are password limitations (which are still being tested in some regions in Central America) and Netflix’s upcoming AVOD addition sufficient to secure the company’s financial future? Early this month, MoffettNathanson reduced its valuation of NFLX, noting that the new target price was temporary “until we delve more on the implications of all the potential changes to the business model, including password sharing and introducing an ad-tier.”
Cutting costs is a different method to generate profits, but it won’t get the stock back to $700 per share. Unfortunately, the quickest ways to reduce costs are through layoffs and abandoning planned projects.
Netflix is now, in some aspects, counting pennies, but, according to a source, the firm still intends to spend $17 billion on content in total in 2022. That amounts to somewhat more than half of what Disney intends to invest across all of its several platforms. Hey, Netflix continues to lead a certain category. According to MoffettNathanson’s assessment, Netflix continues to spend the most on streaming content overall.