Netflix Shares Fell 20% and Downward Trend in Growth in Subscribers

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Netflix shares fell 20% in trading after hours Thursday after the release of its fourth quarter earnings report and continued the downward trend in growth in subscribers.

Netflix’s stock dropped from $101.30 to $406.95 following the announcement that it added 8.28 million subscribers worldwide during its fourth quarter which was an increase of 8.9 percent over the previous quarter last year which was lower than the projection of 8.5 million in October, and a significant slowdown from the 21.9 percent increase for the quarter ending in 2020’s fourth quarter.

Netflix recorded $1.33 of earnings per share, which is up by a whopping estimate of $88 per share and revenue that matched the expectations of analysts of $7.7 billion.

Netflix benefited from an increase in the number of people staying at home in the initial days of the Covid-19 pandemic however, the growth of its subscribers has slowed lately despite the release in record breaking original programming. While two-thirds of the Netflix’s customers were able to watch Squid Game during the company’s third quarter, it gained only 4.4 million subscribers over the time frame but only 70,000 them were out of those in the U.S. and Canada. In the last week the company raised its subscription prices in these countries.

Netflix has highlighted its strength in Google’s list of most popular terms searched in 2021. Netflix owned six of the top 10 searched-for shows and films, with Squid Game and Bridgerton holding the top two slots and two of the top 10 most-searched films: Red Notice and Army of the Dead.

Netflix predicted it will earn $7.9 billion growth in revenue in its first quarter in 2022 at which point the increase in subscription costs is partially taken into account even though existing subscribers were given 30 days notice before they will see an increase in their monthly bills. The company anticipates 2.5 million additional subscribers during the next quarter 1.48 million less than it gained in the same one year earlier.

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