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Netflix Earnings Beat Estimates, but That Isn’t Enough

Netflix (NFLX) revealed its Q1 earnings this week and added 9 million subscribers to its already massive pool of subscriptions.

The company managed to beat estimates for its earnings, and it did so by a decent margin. It was expected that Netflix would bring in about $9.27 billion for the quarter, and they actually brought in $9.37 billion.

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That is an increase of nearly 15% for the company compared to the same quarter last year. The company’s subscriber numbers are also way higher than they were this time last year. They brought in just 1.7 million subscribers for the first quarter of 2023, but they beat that by a mile this year.

That all looks good for the video content streaming company, but why is Netflix stock down 8.84% today?

Netflix’s Poor Outlook

What is dragging the company down right now is its Q2 forecast. As great as the company performed this last quarter, they do not have a strategy that they believe will work to bring in even more sales and grow their company for the upcoming quarter.

Expectations for Netflix were incredibly high coming up to this report, and that has hurt the company moving forward, damaging stock price and putting Netflix in a position where they simply cannot win.

The high subscriber numbers and great sales figures look great at first glance, but where can the company go from here? They have decided that the only place they can go is into hiding. In reaction to the stock price drop and the poor forecast, Netflix has decided to make its subscriber numbers less transparent.

The company says that by 2025, it will stop sharing subscriber numbers. The rationale for that has to be that they think they will have reached market saturation by that point to where it might not make sense to keep promoting how many new subscribers the company has. At that time, they likely expect to have most people signed up for Netflix accounts and not be able to add a significant number of new accounts each quarter.

 

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ABOUT THE AUTHOR See More
Timothy St. John
Timothy St. John
Financial Writer - European & US Desks
Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.
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