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Author: Alan LittleDate: 2022-01-24

Netflix (NFLX) -22% on Q4 paid subscriber miss, weak forecast

Netflix (NFLX) shares slumped 22% on Friday after it failed to bring in as many new paying customers as expected in Q4 and warned of slower short-term growth.

Netflix (NFLX) shares cratered 22% on Friday after the streaming service only brought in 8.3 million paid subscribers in Q4 and warned that growth would be even slower for the current quarter.

Netflix’s ability to attract new customers has been under the spotlight recently, with investors looking for a stronger uptake amid competition from rivals including HBO Max and Disney+ (DIS).

On Friday, Netflix admitted that it was feeling the pressure from those services and that they may be having a negative impact on its “marginal growth”.

The California-based company had recently forecast for 8.5 million new paid subs in Q4 for a total of 222.06 million by the close of 2021, but it fell short on both counts, with the latter coming in at 221.84 million.

This is despite the release of big-budget movies and TV shows, which included Don’t Look Up, starring Leonardo DiCaprio and Jennifer Lawrence.

The focus on subs may be frustrating for Netflix, especially as net profits jumped 85% to $5.1bn and revenues advanced 19% to $29.7bn for the full year.

However, investors zeroed in on a weak subs forecast again on Friday as Netflix said that it only expected 2.5 million more in Q1, which was far below the 5.9 million analyst consensus.

Netflix struck a defiant tone in a conference call as it highlighted its growth in “every country and region” where the likes of Disney and HBO Max have launched.

It added: “Even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world.”

Netflix lost a fifth of its market value on Friday though as shares finished 21.79% down at $397.50 on the Nasdaq.

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