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Jan 20 - Netflix stands to shed nearly $45 billion in market cap



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 4 months ago '21        #1
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LegitBaller  topics gone triple plat - Number 1 spot x1
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Jan 20 - Netflix stands to shed nearly $45 billion in market cap
 

 
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Netflix Inc. brought in more than 8 million new subscribers in the holiday quarter, but executives predicted that growth would suffer much more than expected at the beginning of 2022, sending shares screaming lower in after-hours trading.

Netflix NFLX, -1.48% on Thursday reported 8.3 million net new paid subscribers in the fourth quarter, trailing its own forecast for 8.5 million but roughly hitting the average analyst forecast of 8.3 million, according to FactSet, and giving the streaming-video service 221.8 million subscribers overall as of the end of 2021.

The number allayed the stark warnings of some analysts, including JPMorgan’s Doug Anmuth, who had feared a significant shortfall of new subscribers, but executives do see a precipitous slowdown ahead — they predicted just 2.5 million net new subscribers in the first quarter, less than half the 5.8 million that analysts were projecting on average, according to FactSet.

In a video call following the results, Netflix Chief Financial Officer Spencer Neumann said it was tough to pinpoint why net new subscribers are plunging, but it could be attributable to “COVID overhang” after two years and a “marginal impact from competition.”

Netflix shares plummeted nearly 20% in after-hours trading following the announcement Thursday, which would lop off nearly $45 billion in market capitalization from the streaming giant, which ended Thursday’s trading session worth more than $225 billion. The stock is down 12% over the past 12 months; the broader S&P 500 index SPX, -1.10% has improved 17% in the past year.

Netflix executives said that a lack of new original programming, especially early in the quarter, was a factor in their forecast. Netflix unloaded a wealth of new content in the holiday quarter, including new seasons of popular TV hits like “The Witcher” and “Emily in Paris” as well as some of the biggest movies the service has ever launched, like “Don’t Look Up” and “Red Notice,” and isn’t expecting big new releases until later in 2022.
“Our guidance reflects a more back-end weighted content slate in Q1’22 (for example, ‘Bridgerton’ S2 and our new original film ‘The Adam Project’ will both be launching in March),” they wrote in a letter to shareholders announcing the results. “In addition, 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.”

Netflix’s subscriber growth has waned as the COVID-19 pandemic has marched on, and the streaming service added 18.2 million new subscribers total in 2021, fewer than it added in just the first six months of 2020, when the virus first spread across the globe and caused a wave of shelter-in-place restrictions.

See also: Some on Wall Street want Netflix to stop reporting subscriber growth

As subscriber growth has slowed, Netflix has looked to increase prices in mature markets to continue to grow revenue. After hiking prices in October 2020 for the U.S. and Canada, Netflix confirmed last week it is doing so again for that region, pushing the price of its basic plan higher than the cost of AT&T Inc.’s T, -0.95% HBO Max streaming service.
Netflix’s recent subscription price increase signaled the top of the company’s domestic growth potential, with 74 million households in the U.S. and Canada, Berna Barshay, an analyst at Empire Financial Research, told MarketWatch.

“The subscription guide was borderline catastrophic, and they ran into the law of large numbers” with a stock price at a huge valuation, she added.

Netflix said its sales grew to $7.71 billion in the holiday quarter, up from $6.6 billion in the same period a year ago. Profit was expected to decline as a wave of premieres required Netflix to recognize the costs of expensive content such as the newest season of “The Witcher,” but the company reported earnings of $607 billion, or $1.33 a share, up from $1.19 a share a year ago. Analysts polled by FactSet expected earnings of 83 cents a share on sales of $7.71 billion.

Read: Here’s what’s coming to Netflix in February 2022 — along with a price hike

Netflix continues to command viewer loyalty worldwide — 70% of its desktop visitors watched it exclusively — despite a glut of competition from HBO, Apple Inc. AAPL, -1.03%, Walt Disney Co. DIS, -1.66%, Amazon.com Inc. AMZN, -2.96%, Comcast Corp. CMCSA, -0.22%, ViacomCBS Inc. VIAC, -3.82% and others, based on figures from data intelligence platform Similarweb in December 2021. Similarweb noted that fewer consumers are canceling Netflix, based on a decline in cancellation rate.

Still, Netflix’s vice-like grip on the market has slipped the past two years as competition has escalated, according to one research firm. From the second quarter of 2020 to the fourth quarter of 2021, Apple TV+, Disney+ and HBO Max combined grew from 10.6% to 20.6% of global interest among consumers, while Netflix dropped from 55% to 45.4%, Julia Alexander, a senior analyst at Parrot Analytics, told MarketWatch.

Netflix executives admitted in their letter to shareholders that competition was affecting growth, the first time they have made that admission in a regular quarterly update on the competition.

“While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched,” the executives wrote, later adding that “with under 10% of total TV screen time in the U.S., our biggest market, Netflix has tremendous room for growth if we can continue to improve our service.”


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47 comments
 

 4 months ago '06        #2
cleavon15  topics gone triple plat - Number 1 spot x4
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Yeah. They were definitely the sh*t when everyone was stuck in their homes.
Tiger King exploded but don’t even hear people talking about the new one.

Market’s getting saturated and people are starting to trim the fat.
Disney, CIDM, and GNUS are all taking hits.

Companies are keeping their original programming home with Peacock,
HBO Max, All Access.

Netflix is Prop Joe of streaming.
+13   

 4 months ago '06        #3
bigkilla  topics gone triple plat - Number 1 spot x2
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This will likely be the catalyst for Netflix to crack down on account sharing.
+16   

 4 months ago '17        #4
WHATEVERMAN 
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"In a video call following the results, Netflix Chief Financial Officer Spencer Neumann said it was tough to pinpoint why net new subscribers are plunging."

Anyone else find it funny they're seriously asking themselves this question while raising their streaming prices at the same time? It's like these companies don't understand the concept of an equilibrium price of supply and demand.
+20   

 4 months ago '16        #5
popogogo 
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Disney plus will be the 900 pound gorilla when it's all said and done.
Too much valuable IP.

They will end up with 500 million subscribers.
5 billion a month in recurring revenue.

Crazy.

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 4 months ago '17        #6
Skrr 
Props total: 6267 6 K  Slaps total: 1084 1 K
They still don't have a true prestige program since what...Narcos?. Don't look up was decent but also just a movie.

Euphoria doing numbers rn
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 4 months ago '04        #7
skillahmang 
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HBO Max >>
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 4 months ago '06        #8
cleavon15  topics gone triple plat - Number 1 spot x4
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To put that 20% drop into perspective


 4 months ago '06        #9
cleavon15  topics gone triple plat - Number 1 spot x4
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 bigkilla said
This will likely be the catalyst for Netflix to crack down on account sharing.
It’s really going to be hard to do that. Especially with VPNs. Best they can do is simultaneous viewing.

I think that’s why PlayStation Vue died.

Take for example the business man who spends 100+ nights in a hotel
If he can’t watch his shows on the road, why bother? That’s a demographic you definitely want. The only one they can log into is Netflix on the hotel TV.

More and more companies are allowing viewing “away from home” which opens up account sharing.

Sling was ahead of its time in 2005
+5   

 4 months ago '06        #10
bigkilla  topics gone triple plat - Number 1 spot x2
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 cleavon15 said
It’s really going to be hard to do that. Especially with VPNs. Best they can do is simultaneous viewing.

I think that’s why PlayStation Vue died.

Take for example the business man who spends 100+ nights in a hotel
If he can’t watch his shows on the road, why bother? That’s a demographic you definitely want. The only one they can log into is Netflix on the hotel TV.

More and more companies are allowing viewing “away from home” which opens up account sharing.

Sling was ahead of its time in 2005
It really isn't that difficult to stop VPN's I'm a*suming. Yea tracking data is one thing but tracking the IP's from the traffic is easy.

They can keep up to date with the IP's they're using and keep them on a blacklist.

I have a VPN and that sh*t never works on Netflix. Reminds me I need a new VPN.

Also.. your example is of one person. When multiple accounts are using the same IP's from different locations and etc.. it gets a lot easier to track which ones are VPN's.


Last edited by bigkilla; 01-20-2022 at 09:19 PM..

 4 months ago '06        #11
bigkilla  topics gone triple plat - Number 1 spot x2
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 Skrr said
They still don't have a true prestige program since what...Narcos?. Don't look up was decent but also just a movie.

Euphoria doing numbers rn
Stranger Things
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 4 months ago '06        #12
cleavon15  topics gone triple plat - Number 1 spot x4
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 bigkilla said
It really isn't that difficult to stop VPN's I'm a*suming. Yea tracking data is one thing but tracking the IP's from the traffic is easy.

They can keep up to date with the IP's they're using and keep them on a blacklist.

I have a VPN and that sh*t never works on Netflix. Reminds me I need a new VPN.

Also.. your example is of one person. When multiple accounts are using the same IP's from different locations and etc.. it gets a lot easier to track which ones are VPN's.
But which ones are legitimate and which ones aren’t?
How do you differentiate? Is it worth it?

It’s not easy. The good will get bundled with the bad and the good will leave to someone who doesn’t care.

Is it worth it?

 4 months ago '06        #13
bigkilla  topics gone triple plat - Number 1 spot x2
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 cleavon15 said
But which ones are legitimate and which ones aren’t?
How do you differentiate? Is it worth it?

It’s not easy. The good will get bundled with the bad and the good will leave to someone who doesn’t care.

Is it worth it?
It is not difficult to figure this out. When you see multiple devices connecting to the same IP it's pretty clear it's a VPN.

And it definitely is worth it to them. They just got $45 billion wiped off their market cap. It definitely is in their interest to shut down account sharing and force people to get their own accounts.

None of this VPN stuff even solves the issue.

The problem would be one family having an account and 2-3 people using it.. the parents might be in NYC at home and their kid is in California in college. That has nothing to do with a VPN.

They could force people to register devices to their accounts and if they want to use another device they'll have to remove a device from a list of slots available or something.. let's say they allow like 4 devices per account or something.

Might p*ss some people off but I feel like Netflix is still in a place where it's cheap enough where people won't cancel. I feel like as Netflix gets pricier people will consider it.

This may push Netflix to add commercials as well.
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 4 months ago '06        #14
cleavon15  topics gone triple plat - Number 1 spot x4
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 bigkilla said
It is not difficult to figure this out. When you see multiple devices connecting to the same IP it's pretty clear it's a VPN.

And it definitely is worth it to them. They just got $45 billion wiped off their market cap. It definitely is in their interest to shut down account sharing and force people to get their own accounts.

None of this VPN stuff even solves the issue.

The problem would be one family having an account and 2-3 people using it.. the parents might be in NYC at home and their kid is in California in college. That has nothing to do with a VPN.

They could force people to register devices to their accounts and if they want to use another device they'll have to remove a device from a list of slots available or something.. let's say they allow like 4 devices per account or something.

Might p*ss some people off but I feel like Netflix is still in a place where it's cheap enough where people won't cancel. I feel like as Netflix gets pricier people will consider it.

This may push Netflix to add commercials as well.
You really just explained why it may not be worth it.

You completely ignore a customer because of what you think happens.

What about the business guy out of country who has to use a VPN to get to certain sites?

What about the work devices that require you to use VPN to get online?

What about military?

Now the question remains, is it worth it?

More than just VPN but you’re stuck on that.


Marriott hotels have Netflix as their primary internet tv.
Now that field service tech who spends 100 nights on the road has no reason to get Netflix since he can’t watch it from hotel to hotel or has to go through the pain of registering devices.

At the price it is now, people are still account sharing and you think nixing that and raising the price will not have people consider canceling

Uh. Didn’t subscriber momentum drop without that?
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 4 months ago '17        #15
Lazy 
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 Skrr said
They still don't have a true prestige program since what...Narcos?. Don't look up was decent but also just a movie.

Euphoria doing numbers rn
Squid Game was the most watched series last year

From what I’m seeing they want the most popular show every year, but not necessarily the same one each year
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 4 months ago '09        #16
messy marv stan  topics gone triple plat - Number 1 spot x81
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2 things:


piracy will always exist

and 3 or 4 of these regime prices add up to what the average cable bill is before all them taxes get slapped on the victim
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 4 months ago '04        #17
xbossxplayax 
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i thank the jukebox' demise for finally forcing me to lay off tv for good
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 4 months ago '06        #18
bigkilla  topics gone triple plat - Number 1 spot x2
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 cleavon15 said
You really just explained why it may not be worth it.

You completely ignore a customer because of what you think happens.

What about the business guy out of country who has to use a VPN to get to certain sites?

What about the work devices that require you to use VPN to get online?

What about military?

Now the question remains, is it worth it?

More than just VPN but you’re stuck on that.


Marriott hotels have Netflix as their primary internet tv.
Now that field service tech who spends 100 nights on the road has no reason to get Netflix since he can’t watch it from hotel to hotel or has to go through the pain of registering devices.

At the price it is now, people are still account sharing and you think nixing that and raising the price will not have people consider canceling

Uh. Didn’t subscriber momentum drop without that?
To be honest I don't understand your analogy about Marriott hotels.

But yea.. registering devices isn't a difficult feat.

The person using a VPN to access Netflix already has issues. That changes nothing. I've tried using my VPN to access Netflix for content available in other countries and got denied.

And they still brought on 8.3 million new users the previous quarter. It's just their numbers overall have been lower YoY. After a while they're going to have to address the issue of account sharing as they keep turning every stone to find new users.

I don't know why you're so stuck on this business guy. I'm sure things like this have been taken into account. They can track that user by his MAC address on his device/s and continue to use his devices no problem.
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 4 months ago '06        #19
bigkilla  topics gone triple plat - Number 1 spot x2
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 xbossxplayax said
i thank the jukebox' demise for finally forcing me to lay off tv for good
What Jukebox do you happen to be talking about? ain't no Jukebox around here
+4   

 4 months ago '18        #20
Sick Flair 
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Do ya’ll believe Roseanne used to get 40 million views per week. I wonder what changed?

 4 months ago '06        #21
cleavon15  topics gone triple plat - Number 1 spot x4
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 bigkilla said
To be honest I don't understand your analogy about Marriott hotels.

But yea.. registering devices isn't a difficult feat.

The person using a VPN to access Netflix already has issues. That changes nothing. I've tried using my VPN to access Netflix for content available in other countries and got denied.

And they still brought on 8.3 million new users the previous quarter. It's just their numbers overall have been lower YoY. After a while they're going to have to address the issue of account sharing as they keep turning every stone to find new users.

I don't know why you're so stuck on this business guy. I'm sure things like this have been taken into account. They can track that user by his MAC address on his device/s and continue to use his devices no problem.
The same reason you’re stuck on the nuclear family.

Streaming services have gotten more lenient.

Now you say it’s not that hard, but people cancel for less.

Let me give you a scenario.

Device registered in:
Living Room
Bed Room
Laptop
Kids room/tablet
Car (my car has wifi and hdmi connections)
Fire stick
Phone.

Now. If I can only register, let’s say 4, at a time, I can’t even enjoy it in my own home.
I can’t go from the living room to the bed room without unlinking a device.


That’s why I said the best would be simultaneous viewing, but that still has its issues. They even gave up having the devices be on the same home network.

People travel way too much and it turns out, the ones who travel more, tend to use those streaming services more.

Who do you think slingbox was aimed at when it came out? Travelers!!!

 4 months ago '05        #22
carden2 
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Prime video + showtime
HBO max
ESPN+/Disney+/hulu bundle

Those 3 deals right there are roughly $39 a month. I don’t think there’s better value in the streaming space. Netflix is going up to $20 and YouTube tv went up to $65.
+4   

 4 months ago '06        #23
ehizzy3  topics gone triple plat - Number 1 spot x1
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Im about to get rid of my Netflix account. I haven’t really watched anything on it for awhile now. Didn’t even download it for a couple weeks after I bought a ps5 lol

I really fu*k with narcos tho, I need to get that on dvd

 4 months ago '06        #24
bigkilla  topics gone triple plat - Number 1 spot x2
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 cleavon15 said
The same reason you’re stuck on the nuclear family.

Streaming services have gotten more lenient.

Now you say it’s not that hard, but people cancel for less.

Let me give you a scenario.

Device registered in:
Living Room
Bed Room
Laptop
Kids room/tablet
Car (my car has wifi and hdmi connections)
Fire stick
Phone.

Now. If I can only register, let’s say 4, at a time, I can’t even enjoy it in my own home.
I can’t go from the living room to the bed room without unlinking a device.


That’s why I said the best would be simultaneous viewing, but that still has its issues. They even gave up having the devices be on the same home network.

People travel way too much and it turns out, the ones who travel more, tend to use those streaming services more.

Who do you think slingbox was aimed at when it came out? Travelers!!!
I literally brought up the “nuclear family” once. You’ve hung on this business traveler for multiple posts.

Again.. for travelers they can spot who’s using it by their MAC addresses. That’s really not a difficult task at all.

Most of those devices you listed are coming from the same network so that’s not difficult to sort that out either.

Many scenarios you’re giving are not difficult to handle.

I still don’t even know why you mentioned Marriott hotels supplying Netflix. Do you think Marriott has a regular account or something?

Slingbox is discontinuing their service no?

What’s with you and focusing heavily on travelers man? I said it before and will say it again they can track your devices MAC address.

Are you honestly reading the things I’m writing? I feel like I’ve repeated a few points multiple times and you keep repeating the same stuff.

I’m out.

 4 months ago '15        #25
Hitek 
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Netflix and other streaming platforms are desperate for content right now. This is a huge opportunity for creators.
+3   



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