Investors kept a keen eye on the tech sector overnight as Netflix (NASDAQ: NFLX) released their fourth quarter results with the lasting impact of a pandemic tipped towards the online streaming behemoth.
Netflix has been crowned as one of the most benefited ‘stay-at-home’ stocks during this post-pandemic world, but their reporting outlook proved otherwise.
The main takeaways are earnings per share (EPS) at $1.33 per share vs the expected $0.88, revenue hitting expectations at $7.71 billion, and net subscriber additions of 8.28 million, slightly more than the forecasted 8.13 million.
Yet, the company expects to add only 2.5 million subscribers in the March quarter, correlated to nearly 4 million additional subscribers for the same period last year. As a result, shares tanked during trading, weighed down by the disappointing outlook for subscriber additions.
During the last quarter, Netflix debuted some high-performing content with Hollywood’s top talent which included movies Don’t Look Up, Red Notice as well as the Netflix original series Emily in Paris. This was an effort to bring new subscribers to the platform as the content couldn’t be viewed on any other streaming services. They plan to release further headline premieres before March this year.
In an attempt to improve its revenue numbers for the March quarter, Netflix has raised its prices for the UCAN region (North America and Canada); $1 increase for the basic plan, $1.50 increase for the standard plan, and $2 increase for the premium plan – a move that was favoured heavily by investors and analysts.
“Consumers have always had many choices when it comes to their entertainment time – competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering,” the Company said in a statement.
Despite the intense competition from streaming giants like Disney+ and Amazon Prime, Netflix is well positioned to tackle these challenges with exclusive content and higher subscription prices.
Emerald Financial’s proprietary scoring system started showing a decline in Netflix’s consensus in December last year. This gave an early warning sign of the difference in appeal between major techs like Microsoft and Netflix – the former of which maintained a good score.
Regardless, fears have magnified around rising bond yields and increasing interest rates, causing investors to flee from big techs like Microsoft and Netflix. This has led to pullbacks across the entire sector and bled into the market major.
Trading Desk Assistant at Emerald Financial
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