- Netflix relesed Q4 2021 earnings yesterday after session close
- Headline results in-line with expectations
- Big miss in Q1 2022 subscriber forecasts
- Company takes note of increased competition
- Stock plunged 20% in after-hours trading
Netflix (NFLX.US) reported Q4 2021 earnings yesterday after the close of the Wall Street session. Report was seen as a major disappointment with forecasts pointing to weaker subscriber growth amid rising competition. Let's take a look at headline results:
-
Revenue: $7.71 billion vs $7.71 billion expected
-
EPS: $1.33 vs $0.82 expected
-
Net subscriber additions in Q4 2021: 8.28 million vs 8.19 million expected
-
Paid memberships at the end of 2021: 221.8 million vs 203.7 million at the end of 2020
-
Average revenue per user in Q4 2021: $11.58 vs $11.73 in Q3 2021
-
Q1 2022 net subscriber forecast: 2.5 million vs 6.9 million expected
On the first glance, headline results from Netflix for Q4 2021 does not look that bad - revenue matched median estimate while net subscriber additions and earnings beat expectations. However, while subscriber additions managed to beat market expectations, they have failed to beat the company's own forecasts! Netflix expected net additions in Q4 2021 to be the same as a year earlier in Q4 2020 - 8.5 million. What was even more disappointing were forecasts for the coming quarter. Netflix expects to add 2.5 million net subscribers during the first quarter of 2022 - down from 3.98 million it added in the first quarter of 2021. Market expectations for net subscriber additions in Q1 2022 stood at 6.9 million ahead of Netflix earnings release.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appGiven how much market expectations for Q1 2022 missed the company's expectations, one can say that disappointment in Q4 2021 was small. It should be noted, however, that Netflix has delayed a lot of premiers initially scheduled throughout 2021 to the end of the year and it was expected to result in a big jump in new subscribers. Another source of concern is the first drop in average revenue per user since the beginning of pandemic.
Netflix acknowledged that it may be losing its leader position in the streaming industry. Company said that competition within the industry has greatly increased over the past 24 months with more and more companies entering the field, like Disney or Amazon. Netflix tries to offset weaker subscriber growth with higher prices and has recently boosted prices in the United States and Canada. However, too aggressive price increases create risk of consumer exodus, which would make the outlook for the company even less bright.
Taking a look at Netflix chart (NFLX.US) we can see that the stock finished yesterday trading near the lower limit of the Overbalance structure (equality with 2018 drop). However, stock plunged 20% in the after-hours trading following the release of the Q4 2021 earnings report. Current pre-market quotes point to the launch of today's trading below the $480-565 trading range. Stock is set to begin today's trading in the $400 area - the lowest level since May 2020. If moods remain sour today and share price continues to drop, the first support zone to watch can be found in the $380 area.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
