May 14, 2021

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Netflix disappoints by recruiting fewer subscribers than expected in Q1

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Posted on Apr 20, 2021 11:32 PM

Objective missed. Netflix will have recruited only 3.98 million new paying subscribers in the first quarter of 2020. The streaming giant had announced 6 million – to reach a subscriber base of 210 million in total – while analysts expected 6, 25 million recruits, according to IBES data from Refinitiv.

In a press release, the Californian group explains this slowdown in the growth of its subscriber base by the exceptional breakthrough of 2020, health restrictions having boosted the consumption of streaming films. “We ended 2020 with more subscribers and income than we would have had” without the health crisis, he recalled.

Netflix also emphasizes that its “content offer was smaller in the first half of this year, due to production delays due to the pandemic”. The group has also suffered from fierce competition in the streaming market, including Disney +, which began operating in November 2019, reached nearly 95 million subscribers in February.

The turnover however slightly exceeded expectations to 7.16 billion dollars (5.95 billion euros) against 7.13 billion expected by the market and 5.77 billion a year earlier. Net income was $ 1.71 billion, or $ 3.75 per share, compared to $ 709 million (EPS $ 1.57) a year ago. It is well above expectations, without this seeming to compensate for the slowdown in its growth in the eyes of investors.

The title of the Californian group was sanctioned, falling about 10% in trade after the close on Wall Street on Tuesday night.

The hope of a new impetus in the summer

For the current quarter, the platform expects only 1 million additional subscribers, against 10 million last year at the same period, but hopes for a new impetus from the summer, in particular thanks to the return of very popular like “Sex Education” or “La Casa de Papel” in the second semester.

“Netflix has rallied only a small number of new subscribers and expects even less by the next results,” says Eric Haggstrom, analyst at eMarketer. “This is a source of concern because Disney +, Hulu, HBO Max and others are catching up with them in terms of US subscribers. This means that Netflix is ​​undoubtedly close to saturation in the United States, its biggest market ”.

This refresh “shows that the world is returning a little to normal, at the expense of Netflix,” tweeted for his part Gene Munster of the investment fund Loup Ventures. In the long term, he envisions “almost flat” growth for the pioneer of the sector.

In the midst of the health crisis, Netflix ended the year 2020 on a high note with 37 million new users, a turnover of close to $ 25 billion (+ 24% over one year), and a net profit of 2.8 billion (+ 47%). In January, he announced that he was now able to self-finance for his current operations and no longer depended on debt or capital fundraising.

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