Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

$50bn wiped off Netflix’s value as subscribers quit

$50bn wiped off Netflix’s value as subscribers quit

Shares in Netflix have slumped by 35% after it revealed a sharp drop in subscribers and warned millions more are set to quit the streaming service.
It wiped more than $50bn off the firm's market value as experts warned it faced a struggle to get back on track.

Netflix faces intense competition from streaming rivals, but was also hit after it raised prices and left Russia.

Yet some cast doubt on its plans to boost growth, which include bringing in a free ad-supported service.

It also plans to crack down on password sharing, estimating that more than 100 million non-paying households watch the service this way.

In a sign of the unease, one of America's best known investors, William Ackman, ditched his $1.1bn investment in Netflix on Wednesday, taking a loss of more than $400m.

His hedge fund Pershing Square Capital Management had bought the shares just three months ago.

In a brief statement, Ackman said that while Netflix's plans to change its business model made sense, investing in the company felt too risky.

"While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty," he wrote.

In a trading update on Tuesday, Netflix said its total number of subscribers had fallen by 200,000 in the first three months of 2022, falling well short of its target.

It also said some two million more were likely to quit the service in the three months to July.

Some analysts warned that, after period of turbo-charged expansion during the pandemic, the streaming giant has run out of easy ways to grow.

Squeezed consumers are cutting back on streaming services to save money, while some feel there is too much content to choose from amid an avalanche of competition from rivals such as Disney and Amazon.

"Netflix's wider problem, along with the rest of the sector is that consumers don't have unlimited funds, and that one or two subscriptions is usually enough," said Michael Hewson, an analyst at CMC Markets.

"Once you move above that something has to give in a cost-of-living crisis, and while Netflix is still the market leader, it doesn't have the deeper pockets of Apple, Amazon or Disney, which makes it much more vulnerable to a margin squeeze."

But Julian Aquilina, senior TV analyst at the media research firm Enders Analysis, said it was wrong to write the firm off.

"The streaming market is maturing and the high expectations people had about Netflix are being reset.

"But I think it will remain the market leader, it has such a commanding position. If people are going to ditch a subscription, Netflix won't be the first one they choose."

He added that the firm had just put up its prices "which always leads to a drop in subscribers, but also means it's making more revenue per customer".

Netflix remains the world's leading streaming service with more than 220 million subscribers. It is increasingly producing its own content and shows such as the Crown, Bridgerton and Squid Game have been global hits.

The firm had enjoyed uninterrupted quarterly growth in subscribers since October 2011 but on Tuesday it admitted it was losing customers to rivals, while struggling to expand due to password sharing.

It also said a decision to raise prices in key markets had cost it 600,000 subscribers in North America alone, while its exit from Russia over Ukraine lost it 700,000.

Despite the challenges, revenue grew by $7.8bn (£6bn) in the first three months of the year, up 9.8% compared with the same period last year.

That marked a slowdown from earlier quarters, while profits fell more than 6% to roughly $1.6bn.

Netflix's shares plunged 35% on Wednesday, and fell a further 3.5% in opening trade on Thursday.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
×