Netflix loses almost a million users, less than expected

Netflix takes a breath by aborting the worst case scenario.

Thomas Osborne
Thomas Osborne
20 July 2022 Wednesday 00:01
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Netflix loses almost a million users, less than expected

Netflix takes a breath by aborting the worst case scenario. The results for the second quarter of the year are bad, but not as bad as had been predicted.

At a time of pressure from the emergence of competitors and after the golden age of the pandemic confinement, the world's largest streaming service added its second quarter with a drop in subscribers, which this time climbed to 970,000. But as Wall Street analysts underlined, this figure, higher than the 200,000 of the last count, is well below the two million that were forecast, just as the company itself warned its investors.

Throughout the year the company's share price had fallen 67% due to concerns about its future growth. However, the company's shares rose 8% after its quarterly results came out. Earnings per share, forecast at $2.94, also surprised with an improvement to $3.20.

On the other hand, Netflix's revenues were lower than expected, with growth of 8.6% to reach the figure of 7,900 million dollars, when the estimate was to exceed 8,000 million, while the profit from the operation fell the fifteen%. In this sense, Netflix reported that the fluctuation of the currency exchange rate had an impact on revenues and profitability.

In addition, the growth projection in the third quarter of 2022 will slow down to 4.7%. "Our challenge and opportunity is to accelerate our revenue and subscriber growth," the company said in a letter to investors on Tuesday.

Netflix, with around 220 million customers, estimated that it will grow by one million subscribers from July to September. To do this, it has a plan in which it is planned to introduce a reduced-price service at the beginning of 2023 thanks to the incorporation of advertising and strong measures against the use of shared passwords. The company has also laid off around 5% of its workforce in recent months.

About this advertising initiative, for whose execution they have contacted Microsoft, those responsible for Netflix communicated to investors their intention to implement it and improve quickly.

Another element for growth is a long list of premieres. Netflix knows that content matters.