The Strategist

Netflix shares fall nearly 12% after poor reporting

04/22/2021 - 03:54

Netflix presented its financial report for the first quarter of 2021, showing that the streaming service's number of paid subscribers grew by 3.98 million in three months.

This figure was much worse than the projected 6 million new subscribers worldwide. As a result, immediately after the publication of the statements, the company's shares on NASDAQ plummeted by 11.9%, and its market capitalization, respectively, decreased by more than $25 billion.

The number of subscribers began to grow dramatically last year due to the COVID-19 pandemic, as people began to spend almost all of their time at home, and streaming services have become one of the most popular ways to spend leisure time. Netflix's customer base grew by 15.8 million last year. 

However, the pandemic has hampered the filming of new content, and therefore in the first half of 2021, as the company itself admits, it will have far fewer new releases and sequels to popular series and shows than it could have. On this basis, Netflix now predicts that only about 1 million people will join the service in the second quarter instead of the 5 million previously forecast.

In terms of financial performance, Netflix generated revenue of $7.16 billion in the first quarter (up from $5.77 billion a year earlier) and net income rose by $1 billion year-on-year to $1.7 billion.