Netflix results lose steam with end of lockdowns

Netflix shares suffer in the market after hours due to doubts about its ability to maintain growth as the blockages of the pandemic lift

Netflix shares suffer in the market after hours due to doubts about its ability to maintain growth as the blockages of the pandemic lift.

Netflix fell at the end of operations after its results and outlook fell short of Wall Street estimates, renewing doubts about its ability to sustain growth as locks from the pandemic lift. The world’s largest paid streaming service added just 2.2 million new subscribers last quarter, well below the 3.32 million forecast by analysts, and even the company’s most conservative projection. Netflix also predicted that it will sign up 6 million new subscribers this period, down from the estimate of 6.54 million.

The boom of the pandemic slows down

Throughout the pandemic, Netflix warned that the subscriber boom would not last and, indeed, that its surge in new customers could stunt growth in the future. But he has had trouble predicting the moment. While Netflix’s forecasts for the second quarter proved overly cautious, its outlook for the third quarter was overly optimistic. Many viewers, especially in Europe and Asia, have returned to something closer to normal everyday life, reducing the amount of time they can spend bingeing on Netflix. And professional sports are back on American television screens. All of that hampered subscriber gains last quarter, with growth hurting in all three regions.

The business is maturing

“It’s the sign of a maturing business,” said Jim Nail, an analyst at Forrester Research. “Infinite growth cannot go on forever.” It was Netflix’s weakest third-quarter profit since 2015, when the company was not yet operating in most of the world. In its letter to investors, management blamed a “breakthrough” effect: rapid growth in the first half of the year stole the results of the most recent months. The streaming service also warned investors that it would see slower growth in the coming quarters. Shares of Netflix fell as much as 7.4% to $ 486.50 in after-market trading. The shares were up 62% this year as of Tuesday’s close.

Channeling the program

Netflix has still overshadowed many television networks and services, which have struggled to find new programming to stream during the pandemic. The company released a comprehensive list of movies, TV shows, and documentaries. But its most popular shows are still primarily in English, which could limit its overseas expansion. “The Old Guard,” an action film starring Charlize Theron, was his most-watched title in the third quarter, followed by two other films, “Project Power” and “The Kissing Booth 2.” “American Murder: The Family Next Door,” released in September, is on track to become the service’s most-viewed documentary. The performance of its original series was less robust, which may help explain why the company just restructured its TV division.

50 new projects

Netflix played down the impact of the pandemic on its portfolio of new shows. The company said it has completed 50 projects since the initial shutdown of production and will launch more programs next year than in 2020. “We are confident that we will have an interesting variety of programming for our members, particularly in relation to other entertainment service options,” the company said.

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