Premium: Netflix shares to take another bath as quarterlies worse than poor forecast
What happens to the share price when an exponential company goes ex-growth? It's not pretty, as we're witnessing at Netflix, one of the long-time BizNews favourites. Last night the video streaming pioneer delivered a second successive quarter of disappointing numbers. The shares are set to open 25% lower on the news.
In January, when the company projected Q1 subscriber growth of 8%, Mr Market panicked. But many longtime fans gave Reed Hastings' creation the benefit of the doubt. We were wrong. Even that modest projection was optimistic. For the first time in a decade, subscriber numbers actually fell in the three months to end March. Even worse has been projected for Q2.
When the US markets close tonight, Netflix's share price is likely to be 50% below where it started 2022. Suddenly the usually steadfast Hastings is blaming 'account sharing' and competition. And an ad-driven option is being mooted, introducing new risk and complicating the business model.
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