Last night, one of the earnings highlight was from Netflix! Netflix shares tumbled the most in two years on Friday as a weak forecast for revenue and a warning that the streaming giant will stop reporting subscriber numbers in 2025 overshadowed an otherwise strong start to the year. The stock dropped 9.1%, to $555.04 at the close, the biggest decline since April 2022. Still, the shares have gained 14% this year.
Netflix slumped after the video streaming company's second-quarter revenue view fell short of analysts' expectations while the company also unexpectedly said it would no longer provide subscriber counts. Subscriber additions have long been watched by investors and Wall Street analysts to evaluate how companies are faring in the streaming wars.
But after three quarters of blockbuster growth in subscribers, streaming pioneer Netflix said late on Thursday it would stop reporting the figure to focus more on revenue and profitability. There are signs that streaming growth is saturating in the U.S. as it halved in 2023. Maybe that's the reason that the company stop sharing the numbers? We don't know.
Netflix daily chart
From the technical chart above, we could see that the share price plunged last night with a fierce gap down. Also, the closing price was at the lowest point of the day, meaning to say there's no a signal sign of rebound yet. As I draw in the chart, we can see that there's a gap at around 500 USD since the previous earnings release. I believe with all the bearish sentiment on Netflix after Thursday's result, the share price will continue to drop $Netflix(NFLX)$
Netflix
Are you a subscribers or fans of Netflix? How do you interpret Netflix's earnings? Is it good or disappointing for you? @TigerStars @CaptainTiger @Tiger_comments @MillionaireTiger @Daily_Discussion @TigerGPT @TigerWire
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Earnings Data:
According to the latest reported earnings for Netflix, the company's earnings per share for the first quarter of 2024 were $5.40. The return on equity (ROE) was 44.47%, indicating strong profitability. The net profit margin was 24.89%, showing a healthy level of profitability. The total liabilities to total assets ratio was 39.61%, suggesting a relatively low level of debt. The company's quick ratio was 0.76, indicating a lower ability to meet short-term obligations. The gross profit margin was 46.89%, reflecting a strong level of profitability.
Comparing the first quarter of 2024 to the same period in the previous year, we can see significant improvements in key financial metrics. The earnings per share increased from $2.93 to $5.40, and the ROE increased from 24.51% to 44.47%. The net profit margin also improved from 15.99% to 24.89%. These positive trends indicate that Netflix has been performing well financially.
Earnings Call:
The earnings call transcript for Netflix's Q1 2024 earnings revealed several key points. Some bullish points include the diversification of income streams with the addition of advertising and extra member features, a strong revenue outlook for the year, and high engagement levels indicating strong customer growth and retention prospects. The introduction of new business growth levers, such as plan optimization and ads revenue, was also mentioned as a positive factor.
On the bearish side, Netflix announced that it will stop reporting quarterly membership and average revenue per member (ARM) data in 2025, potentially reducing transparency. The company also mentioned that revenue predictions may be complicated by evolving pricing and plans. Additionally, foreign exchange headwinds and lower average revenue per member in the near term were identified as potential challenges.
Relevant Opinion:
There are several relevant articles that provide opinions on Netflix's earnings. One article from Needham upgraded Netflix to "Buy" from "Hold" based on revenue upside. Another article highlights the positive surprise in subscriber numbers for the first quarter but notes that the revenue outlook and the decision to stop reporting quarterly subscribers next year disappointed investors. The article also mentions the impact of the ban on password-sharing on Netflix's performance.
Conclusion:
Based on the earnings data and the information from the earnings call and relevant articles, Netflix's earnings for the first quarter of 2024 were generally positive. The company showed improvements in key financial metrics and reported strong subscriber numbers. However, the decision to stop reporting subscriber counts and the revenue outlook raised some concerns among investors.
It is important to note that the analysis provided is for informational purposes only and should not be considered as investment advice. Investors should conduct their own research and analysis before making any investment decisions.
Sources:
Netflix (NFLX) Q1 2024 Earnings Call Transcript
Netflix (NFLX) raised to Buy at Needham & Company on revenue upside
Netflix's Subscriber Numbers Surprise, But Revenue Outlook Disappoints
BUZZ-Street View: Netflix set to grow on rising ad-supported revenue
Netflix Q1 Earnings: Uncertainty Led The Sell-Off, But There's More To This
Netflix Inc (NFLX) Q1 2024 Earnings Call Transcript Highlights: Key Financial Metrics and ...