Well, this looks kind of bad Straight From The Verge.
It says, Netflix stock plunges as the company, mrs.
Growth forecast, investors aren't pleased.
All right, Virgil speak for yourself.
I'm a Netflix investor. Let's go ahead and see how not
pleased, I am. Let me go ahead and zoom in on
this will go through the news together.
This doesn't sound good though, the stock is plunging Netflix.
Investors have been worried about the company that the
company isn't adding subscribers fast enough.
And today, they started to panic.
It's investors, are in a full-on panic.
This sounds really bad. After Netflix reported lower
than projected subscriber additions for the final quarter
of 2021. Great, they missed on subscriber
additions. They must have missed by a lot.
I'm just assuming by this article, they missed by a few
million. It sounds pretty bad, the stock
plummeted, nearly 20%, 20%. This has got to be one of the
worst sell-offs in Netflix's entire history, 20% after hours,
in one day, it's not like the stock recently had a huge run
It's down 20% already before the sell off from its all-time high.
So investors have sold off another 20% after hours, they
say the plunge was the lowest astok had dropped since June of
2020 Okay, that doesn't sound good at all last quarter,
Netflix had forecasted that it would report. 220 point zero,
six million subscribers. So that was Netflix is crazy
prediction. Obviously Netflix, drop the ball
here, they probably didn't get anywhere close to this number
million paid subscriptions by the end of last year.
Instead the company reported Thursday that it ended the
fourth quarter with 220 1.84. Wait a minute.
So this big Miss with their subscribers is from 220 2.0, 62
220 1.84. So they missed their big
subscriber prediction by less than a tenth of a percent.
That is their big miss. That can't be why investors are
concerned. Not because they added eight
point three million subscribers in the past. 90 days, a lot of
new subscribers in all around the world, in the US, and across
the seas. But Let's go ahead and continue
on and see what really got to Netflix.
It's a small difference but investors have been worried
about Netflix. Okay, already one of the biggest
streaming companies out there being able to find new ways to
keep growing and by Netflix is on estimates.
Subscriber growth is going to be low next quarter as well.
The company estimates that it will add 2.5 million subscribers
in the first quarter of 2022 down from 4 million during the
same period last year, man. That sounds awful.
You're telling me a company that just gained eight point three
million News. Net additions is only going to
add another two point. Five million next quarter
instead of the four million that they added last year of the same
quarter, meaning they won't have the exact same growth year over
year and subscribers when they have.
Content, slates different releases of content in different
times. That is horrible.
This sounds really bad for Netflix.
Now, that all said, plenty of people are still coming to him
paying for Netflix, Revenue grew, 16 percent year-over-year.
Didn't people just sell out of this company by 20% so far.
They missed their overall subscriber numbers by one tenth
of a percent. They're almost perfectly
accurate with it on the the whole number.
There, they grew by eight point. Three million subscribers last
quarter. And they grew their revenue by
16 percent year-over-year. This is a company that that
people are running to the exits from investors are fleeing like
it's a burning building, right? And I'm stuck here, like the
captain of the Titanic going down with the ship.
This is the big bad company that's happening with they say
and paid membership. Rose nine percent
year-over-year. So revenues growing, paid
membership is growing but in this must be the big caveat
here. While Netflix is still growing,
it's doing so incrementally. It's not growing quite as fast,
both subscribers and revenue growth.
Have been pain points for anxious investors, particularly
in the US the company's biggest Market while retention
engagement. Remain healthy.
Acquisition growth has not yet. Read accelerated to pre covid
levels. The company said, we think this
may be due to several factors including ongoing covid overhang
and macro economic hardship and several parts of the world like
Latin America. So maybe this is just a cop-out
from Netflix blaming the covid overhang but it is ironic that
Spotify. Use the exact same cop out as
well. They said that according to
their data places, it still have issues with covid and their
economies are still affected. They're seeing more struggles
with engagement and growth there as comparable to other parts of
the world. Now The Verge goes aren't they
say somewhat curiously? Netflix had very little to say
about its recent price, hike in the u.s. instead, it pointed to
recent play something feature as one example of the way, the
company adds value for its users ahead of its call, the Also
appeared to preemptively waft away.
Any investors concerns about its increased competition during the
last two years they say, quote, while this added competition,
may be affecting our marginal growth.
Some, we continue to grow in every country and region in
which these new streaming Alternatives have launched.
So Netflix there they did actually admit right here in
their earnings report. That competition is having an
effect, which of course, it is to some extent, but they also
acknowledge that they're still growing and every single
country. And region that they operate,
they grew subscribers in the u.s. they grow in Canada, they
grow in Latin America, they grew mostly in the passive Pacific
Asia area so they're growing all around the world everywhere.
Even where this competition now they say this reinforces our
view that the greatest opportunity and entertainment is
the transition from linear to streaming and with that still
under 10 percent of total TV screen time in the u.s.
So streaming still represents less than 10% of screen time in
the US. And overseas across the world.
The opportunity is virtually Limitless.
There's over a billion households that have internet
connection that don't yet have a Netflix.
So the opportunity remains pretty large, they say perhaps
Netflix, biggest concern, should be its growth and sign-ups are
slowing even during a quarter in which Netflix, premiered, two of
its most viewed films ever read. Notice and don't look up to keep
investors nerves calm, Netflix will need to start accounting
for its sluggish growth or at least spin.
Up some creative ways to justify it.
Moving forward. Okay.
So that all makes sense that virtue article really covered
it. That's the reason that investors
are fleeing out of Netflix because of all this bad news in
the last quarterly report just to summarize.
This big 20% sell off today. 20% after hours which is a
substantial sell-off is caused by a couple different things.
Let's summarize, what's going on with the company?
First of all, it has 220 1.8 million subscribers, it grew at
subscribers all across the globe.
It grew them in the US last quarter.
It rhythm in Latin America, the grew them in Asia Pacific and it
grew them in Europe. Every corner of the earth likes
Netflix and they're growing subscribers everywhere.
That's the first thing that's the first part of the report.
The second is that they beat their earnings per share.
I mean, they just Crush their earnings per share guidance but
nobody cares about that. Their revenue grew 16 percent
year over year which is very strong growth of a company.
The size they're operating income grew by 35 percent year
over year, they know, Oh in their earnings report that
engagement remained very strong and the company's free cash flow
positive from this year. They're projecting be free, cash
flow positive and every year in the future, meaning that unlike
many of those other streaming services that are getting loans
and debt and they're trying to raise Capital to pay for all
their content, Netflix can self-fund from here and
definitely they can continue to self-fund at this level.
That is a summary of this bad earnings report, 16 percent
earnings growth beating Per share, free cash, flow positive,
8.3 million, net addition ads, last quarter, and they're
projecting two and a half million this quarter.
And they say the reason why it's a little bit less this quarter
than the rest of the year, is because their contents late is
more heavily weighted towards the end of the year.
So in my opinion, when I look at the fact that Netflix is still
continuing to grow everywhere in the world, their average revenue
per user is going up their revenues growing their operating
margins growing, their free cash flow continues to be positive
and growing in the future and overall the engagement of the
company. Remains strong.
They have the most subscribers with the highest average revenue
per user than any streaming service.
I don't see much to be concerned about here, and I think that
this reaction from the market is a substantial over reaction.
Even when I look at their earnings report, it goes on
explaining why they have lower projections for this quarter.
They say that the content slate is a little bit lighter this
quarter and it's more heavily weighted towards next quarter.
So, they are expecting this, that's what they're forecasting.
They also mention that they're winning more Emmys.
They're winning more Oscars. In any other streaming service
Netflix has the dominant lead in streaming even after this
quarter. They continue with the dominant
lead. No, other company has as many
subscribers. None of them have any.
We're as close to the same average, revenue per user.
They're not even close. And none of them have the same
International strategy is Netflix.
So, when I look at this sell-off, I think it's a big
over reaction. That's my opinion on it but
again, I could be wrong. I'm invested in Netflix.
I like the company. This hasn't changed my mind.
The only thing that's changed from this is the price of the
company and I will be accumulating a bigger position
in it. So as the sell-off goes through
and we see the shares decline in value, I'm going to continue
picking up as many shares as I can, because as far as I'm
concerned, the story of this company and the future of it has
not materially changed at least in this earnings report.
I see almost nothing to be materially concerned about.
So that's my thoughts on this earnings report, the honest
thoughts on it, aside from the sell-off.
I feel very happy as a shareholder of this Knee.
I feel like the company is stronger today.
The only thing that's really changed in my opinion, it's the
price. So I'm going to be buying more
of it. I'm interested to hear your
thoughts. If you want to portfolio update,
I'll be giving one later this week.
So subscribe to the channel. I'll have more content out in
the future.