What happened
Shares of Netflix (NFLX -9.09%) plunged by 71% in the first half of 2022, according to data provided by S&P Global Market Intelligence.
The streaming TV giant saw its share price catapult 85% from the beginning of 2020 through the end of last year but has lost all of that and more in just six months this year.
Image source: Getty Images.
So what
Investors are growing increasingly worried that growth may be a thing of the past for Netflix, and they have every reason to believe so. All was well for 2021 as the company reported yet another year of subscriber growth, with a 9% year-over-year increase to 221.8 million members. The increase coincided with a sparkling set of financial numbers. Revenue for 2021 rose 18.8% year over year to $29.7 billion while net income surged 85.3% year over year to $5.1 billion.
It was a different story when the first quarter of 2022 rolled in. The company shocked investors when it reported its first quarter-over-quarter subscriber loss in a decade. Paid memberships dipped by 200,000 to 221.6 million from 221.8 million, but it was enough for many to question if the competition was finally catching up with Netflix. It didn't help that net income dipped by 6.4% year over year even though revenue rose nearly 10% year over year to $7.9 billion.
To make matters worse, Netflix forecast that it would lose 2 million subscribers in the next quarter, translating to just 5% year-over-year growth. Subscriber growth was grinding to a halt even as the streaming giant predicted a second consecutive quarter-over-quarter subscriber loss. It remains to be seen whether Netflix can stem the subscriber loss in subsequent quarters.
Now what
Netflix seemed unfazed by the numbers and appears determined to grow its content slate to keep customers coming back. Management said it believes that in the long term, most of the company's growth will come from outside the U.S., as it increasingly caters to audiences in different countries with popular TV series and movies in various languages.
In a bit of good news, supernatural thriller Stranger Things set a new viewing record for the streaming company as it logged 1.15 billion viewing hours, just behind the blockbuster Korean series Squid Game. The series proved so popular that Netflix is planning a spinoff, though no details on the story or characters have been provided as yet.
