There was an update on Jul 19, 2022,4pm.
After the closing bell Tuesday, shares of the streaming giant surged even though it disclosed in its second-quarter earnings report that it lost subscribers for a second quarter in a row, as the total was lower than investors had feared.
Some investors had feared that the results would be worse than they were.
In after-hours trading, investors cheered the better-than-expected second-quarter earnings report, pushing the stock to a new all-time high.
The streaming giant reported that it lost 970,000 subscribers in the most recent quarter, less than the previous forecast of losing 2 million subscribers, but management is still optimistic about adding back customers later in the year.
The analyst estimates for the second-quarter subscriber loss had ranged from as much as 4 million subscribers to as little as 1.5 million, with some analysts citing the strong performance of season four of the show.
After a dismal first quarter, investors were hoping for an improvement, but they were disappointed.
In the second quarter, earnings came in above expectations, but revenue was lower than expected.
Last week, the company announced that it will be partnering with Microsoft in order to introduce a cheaper ad-supported subscription plan, but the project is still in its infancy.
Charles Lemonides is the founder and chief investment officer of ValueWorks. The negative news was a small blip in the long-term growth story. The company is still the strongest streaming platform with the greatest ability to spend dollars on creating new content, and that is a tough position to compete with, according to him.
The company's stock has plummeted this year. Like other tech stocks,Netflix shares were hard-hit by concerns over surging inflation and rising rates, but a significant portion of the company's recent struggles have been related to slowing subscriber growth. There was a wave of downgrades from Wall Street analysts when it was revealed that the company lost 200,000 subscribers in the last quarter.
"While a meaningful 2Q or 3Q subscriber beat or miss might temporarily move Netflix shares post- earnings, we expect shares will revert to their trading range as visibility will remain low and the company's pivot to advertising does not even begin in earnest until late 2022," said Credit Suisse analyst
It's the first time in ten years that the company has lost subscribers.
There is a growth story in the stock crash.
There are partners for ad-supported service.
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