Netflix: super cool, but very disappointing (at least on the stock market)

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Is being in fashion good from a profit point of view? Maybe not so much. Indeed perhaps not at all. Take for example Netflix, which yesterday revealed its quarterly data, compared to forecasts.

Netflix has theoretically produced some big hits like Squid Games, Don't look Up, Red Notice etc. One would expect an exceptional result in the fourth quarter of 2021. Instead, from an economic point of view, it did not go as promised.

Here's what NFLX just reported for the fourth quarter.

EPS (Earnings Peer Share) $ 1.33, beating estimate of 81c
Revenues $ 7.71 billion, corresponding to an estimate of $ 7.71 billion
Operating margin 14.4% versus 8.2% estimated y / y, beating the estimate of 6.96%
Operating income $ 631.8 million, down 34% y / y, but also beats $ 559.0 million estimate
Cash flow of $ 569 million versus $ 284.0 million negative y / y, missing the estimate of $ 516.8 million negative
So far so good, or at least not terrible.

This is where the bad news begins: because while the company previously expected 8.5 million paid subscriptions in the fourth quarter, it only reached 8.28 million (which was still just above Wall Street's estimate of 8.13 million). ), down 2.7% yoy

Here's how the company explained this failure:

We slightly overestimated the increases in paying subscribers in the fourth quarter (actual 8.3 million versus an estimated 8.5 million). For the full year 2021, new paid subscriptions totaled 18 million compared to 37 million in 2020. Our service continues to grow globally, with over 90% of our new subscriptions in 2021 coming from outside. of the UCAN region (USA and Canada ).

On the other hand, there was a lack of subscriptions in those markets, South America and Asia Pacific, on which the company was focusing the most. To make matters worse, a further expected, very strong slowdown in subscriptions at the beginning of 2022, which suggests a bad year.

So a stock that was 700 two months ago has plummeted vertically in the past week, taking the last hit yesterday with a drop of nearly 20%.

Being fashionable doesn't pay off. It is not going to sell subscriptions. You have to get over it. However, streaming isn't developing as many investors predicted: Netflix disappoints, Disney struggles to garner subscribers, and Google has virtually shut down YouTube Originals. Aren't they offering things that people don't want?

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The Netflix article : very cool, but very disappointing (at least on the stock exchange) comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/netflix-fighissimo-ma-molto-deludente-almeno-in-borsa/ on Fri, 21 Jan 2022 07:00:59 +0000.