Today's video focuses on Netflix's (NFLX -1.74%) most recent earnings, which triggered a massive sell-off in its stock price. The biggest reasons are the loss of subscribers this quarter and weak guidance for the upcoming quarter, when management expects a more considerable drop in members. There was also a major change in the company's shareholder letter that some investors might not be happy about. Here are some highlights from the video.
- Netflix usually shares two charts in its shareholder letters, the global paid net adds by quarter (forecast vs. actuals), and the weekly global paid net adds year to date. As I read through Netflix's shareholder letter, I noticed these charts were missing. Even though the charts have no financial impact, some investors might believe that removing them could be seen as a way of Netflix being less transparent with its investors.
- There are four main factors contributing to the slowdown in the business. First, the growth into specific markets is dependent on factors not controlled by Netflix, such as the adoption of on-demand entertainment, data costs, and the uptake of hardware used for streaming like connected TVs. The other three reasons are password sharing, competition, and macroeconomic factors.
- On the positive side, Netflix still expects positive free cash flow for this whole year and beyond. Subscriber growth would have been up 500,000 if it didn't end its services in Russia.
*Stock prices used were the closed market prices of April 19, 2022. The video was published on April 19, 2022.