Netflix reports losing 200K net subscribers in Q1, vs. an estimated 2.5M net additions, and $7.87B revenue, vs. $7.95B est.; Netflix opens down 30%+

Netflix (NFLX) reported an unexpected decline in first-quarter net subscribers as the company navigated an exit from Russia and an increasingly saturated North American market.

Yahoo Finance 2022-04-20 Emily McCormick

Context & Ripple Effects

Netflix entered the quarter after reporting 222 million paid subscribers and weak guidance in its Q4 results. Its North American base had already shown strain: the U.S. and Canada region lost subscribers in the prior year's second quarter.

The combination of a Russia exit and saturation in North America turns a forecast miss into a sharper test of Netflix's growth assumptions, rather than a revenue-only shortfall.

First-order effects

Netflix misses both its subscriber-growth and revenue expectations, while its more than 30% opening decline immediately reprices NFLX around weaker near-term growth.
North America is the central pressure point for Netflix: saturation limits its ability to offset subscribers lost through the Russia exit with additions in its largest mature market.

Second-order effects

Netflix's next subscriber forecast becomes a more consequential benchmark for investors, after weak guidance in its previous quarterly report was followed by a much larger-than-expected subscriber shortfall.
The gap between expected additions and the reported decline raises the bar for Netflix to show that revenue growth can hold up when paid-member growth is no longer dependable in North America.

Third-order effects

If repeated, subscriber misses would shift Netflix's investor narrative from scale expansion toward accountability for retention and monetization in mature subscription markets.
The pattern points to subscription-video businesses being valued less on headline member totals and more on whether forecasts withstand saturation and geographic disruptions.

The trend: Streaming subscriptions are moving from expansion-led valuation toward scrutiny of growth forecasts, retention, and revenue resilience in mature markets.

Discussion

@levynews Ari Levy on x
$NFLX has lost 62% of its value in 5 months, based on after hours trading. At its lowest since Oct. 2019. https://www.cnbc.com/... https://twitter.com/...
@sherman4949 Alex Sherman on x
Netflix is now down more than 20% after hours after being down more than 25% after its earnings LAST quarter.
@lucas_shaw Lucas Shaw on x
Netflix shares are already down almost 20%. Netflix could be worth < $120B by this time tomorrow.
@pkafka Peter Kafka on x
Netflix had to spend a full page of its investor letter explaining why it lost 200k subs last quarter and will lose 2 million more next q. Tldr: World needs more streamers; too many password-sharers; competition turns out to be a thing, after all; COVID,Russia, inflation, dunno. …
@lucas_shaw Lucas Shaw on x
Netflix blames password sharing and competition for its slowing growth. It also says the pandemic obscured its problems. https://www.bloomberg.com/...
@loudmouthjulia Julia Alexander on x
Love whenever Netflix has a rough quarter and everyone on Twitter goes “maybe make some good content!” ...yes? Obviously? It's the reason Casey Bloys and his team are so protected by every conglomerate that buys HBO. Making a lot of TV is easy; making great TV is near impossible
@lucas_shaw Lucas Shaw on x
There is a very hard solution for Netflix's problem: make better shows. https://www.bloomberg.com/...
@jsphctrl Joseph Cotterill on x
I wonder when Netflix (now losing subs for the first time in a decade) will start breaking out Africa subs to reassure its shareholders that it's growing somewhere. (Assuming there is healthy Africa growth.) https://s22.q4cdn.com/...
@stevekovach Steve Kovach on x
Netflix says 100 million households aren't paying because they share passwords. (They now have all the excuses they need to crack down.) https://twitter.com/...
@onejarednewman Jared Newman on x
Also: Maybe it's time to start supporting universal guides (Apple TV app, Google TV, Roku Save List, etc) instead of expecting users to default to your app all the time? https://twitter.com/...
@film_girl Christina Warren on x
When you consider that a group of 6 could spend $20 a month for Apple TV+, Apple Music, and iCloud storage (plus Apple Arcade, I guess), that puts everyone else to shame.
@film_girl Christina Warren on x
What I'm saying is Netflix is no longer the top dog for catalog or must-watch TV or movies. HBO will always have superior content, always, and Disney and Apple are both solid. Plus you can get 3 other services for the price of Netflix. Just...
@kantrowitz Alex Kantrowitz on x
I had to upgrade my account last month when I was watching on a trip while someone was watching at my house. We both had Netflix subs but they were on the living room TV. Netflix counts that as two households, but should it? https://twitter.com/...
@htsfhickey Fred Hickey on x
Netflix - what a disaster. NFLX already cut in 1/2 from just 5 months ago ($701 to 349), yet 61% of analysts still had “Strong Buy” or “Buy” ratings with an avg. target price of $504. After hrs. down another 25% to $262. Analysts loathe to downgrade faves https://finance.yahoo.co…
@film_girl Christina Warren on x
Final note/addendum to Apple TV+: Not only is it one of the cheapest offerings, if you do one of the Apple One plans, you have the ability to share it with family members, no matter where they live. My parents are on My Apple One Premiere plan and get all my goodies
@thestalwart Joe Weisenthal on x
The K shaped recovery! Digital pure play companies like $NFLX getting killed and falling below pre-covid levels. Real life companies like Marriott hitting all time highs. Just like everyone predicted. https://twitter.com/...
@lucas_shaw Lucas Shaw on x
Netflix says it lost about 700,000 customers by pulling out of Russia. It lost about 600,000 customers in the U.S. and Canada, largely because of a price increase.
@carnage4life @carnage4life on x
Netflix's first time losing subscribers in 10 years. As I mentioned earlier today, we have a generation of people used to seeing a bull market in tech stocks but the reality is that FAANG are all close to saturation in their markets. https://www.cnbc.com/...
@mattlanza Matt Lanza on x
I'm not a business expert by any means, but. maybe, just maybe...and hear me out here...the market is completely saturated with streaming services and something has to give. https://twitter.com/...
@ldignan Larry Dignan on x
Netflix $NFLX loses 200K net subs in Q1 and projects a loss of 2 million subs in Q2. Inflation means people cutting budget. Netflix's partial solution to hold operating margins: “more effective monetization of multi-household sharing.” https://s22.q4cdn.com/... https://twitter.co…
@teroterotero Tero Kuittinen on x
@TVMoJoe HBO, Disney, Apple and Prime have had such a hot streak of unique, high quality shows. Netflix has coasted along low quality scripts for years and now it faces a grim reckoning.
@jamesrbuk James Ball on x
The “Your monthly price will change to £15.99” popup I got the other day had me cancelling my account in minutes. Netflix is heavily debt-financed, no longer growing, and its growth proposition is cracking down on account sharing - ie paying *still* more. Tough sell. https://twit…
@jank0 Janko Roettgers on x
I bet everyone at Netflix is relieved right now that the company pre-records its earnings interviews. I remember the post-Quickster earnings call, and it was a disaster.
@jyarow Jay Yarow on x
If video games really is the answer, good time to buy Netflix.
@pkafka Peter Kafka on x
Worst quarter since Qwikster. The difference: In 2011, Netflix screwed up. This time the problem isn't Netflix - it's the competition. https://twitter.com/...
@lucas_shaw Lucas Shaw on x
Netflix co-founder @reedhastings on the company's slow start to the year: “I know its disappointing for investors, but internally were really fired up. This is our moment to shine. This is when it all matters.”
@film_girl Christina Warren on x
This is what you're competing against, Netflix. It isn't just that you have other streamers competing. Amazon and Apple have full-fledged bundled services for the same/lower price. And Disney has a robust bundle too. If you don't have the content why do you expect people to stay?
@danprimack Dan Primack on x
Maybe a rebrand is in order. Qwikster?
@adamnash Adam Nash on x
The loss of 200K subs is overstated, due to the 700K impact of Russia sanctions. But the real variance is from competition, which is new. HBO, Apple both very high quality. Street was expecting 2.7m new subs. But Netflix $NFLX is built to compete... 👊 https://www.cnbc.com/...
@carnage4life @carnage4life on x
Netflix predicted it would add 2.5M subscribers in Q1 but actually lost 200,000 instead. This was a huge miss but even bigger is that they expect to lose another 2M in Q2. 🤯 https://variety.com/...
@pkedrosky Paul Kedrosky on x
Remarkable implosion of a former darling https://twitter.com/...
@film_girl Christina Warren on x
If Apple TV+ is the dark horse, Prime Video is the one you probably already have access to b/c Amazon. It's the Microsoft of streaming services. Best at nothing but still ubiquitous and thus essential.
@jrawson James on x
It's time to nationalise Netflix so it can compete with the BBC and Channel 4 https://twitter.com/...
@benedictevans Benedict Evans on x
Alt: Netflix is the fast fashion of TV, but Zara and Shein aren't subscription businesses
@jimcramer Jim Cramer on x
was that show on Netflix? No Hulo. Did you see that on Netflix? Not Apple+
@randystg @randystg on x
Lol raising your prices and threatening subs about password sharing tends to have that effect. https://twitter.com/...
@mgsiegler M.G. Siegler on x
Two predictions: 1) Netflix will figure it out 2) It won't be games https://twitter.com/...
@kgreifeld Katie Greifeld on x
name names https://twitter.com/...
Gameranx Dani Cook on x
Netflix “Quite Open” To Offering An Ad-Supported Plan
@brotifa Sebastian on x
They should call it something catchy. Like “cable” https://twitter.com/...
@alexweprin Alex Weprin on x
“It is pretty clear that it is working for Hulu, Disney is doing it, HBO did it. We don't have any doubt that it works.” Netflix embraces advertising: https://www.hollywoodreporter.com/ ...
@film_girl Christina Warren on x
Apple TV+: Dark horse: cheap ($5 a month or less if you bundle), some great must-watch TV, mediocre catalog So you can dump Netflix, get Peacock, Paramount+, AND Discovery+ for less $$ or swap one of those options for Apple TV+ and STILL less than Netflix
@gayguycandleco @gayguycandleco on x
Someone please just put all of these streaming services on one platform and let it become even more outrageously priced than the cable we all left for streaming so we can just get it over with. 🙄 https://twitter.com/...
@daveleeft Dave Lee on x
Netflix isn't in a great spot. Prices going up; clamping down on sharing accounts. Years ago decided to focus heavily on Originals instead of archive, losing films, and Friends, and The Office. Not interested in sport, which for decades has been a big driver of loyalty.
@centristmadness @centristmadness on x
People will probably look back on this as an inevitability but imho they simply were bad at programming. They used algorithms based on what people watched the most on their service and ended up with derivative content and HBOMax and Hulu ate their lunch. https://twitter.com/...
@wbm312 Whitney Merrill on x
OH look now they'll expect you to PAY them to watch ads. Are you kidding me? Is Netflix the new Blackberry? https://twitter.com/...
@film_girl Christina Warren on x
I'm a huge Netflix fan, but searching for new subs could lead Netflix to making dumb, dumb, dumb. Decisions. B/c this is how the content landscape works today 🧵 Netflix: Most expensive, least must-watch content, smallest back catalog, best interface, ubiquitous
@sherman4949 Alex Sherman on x
Today is a dark day for your ex-boyfriend's brother. https://www.cnbc.com/...
@iamsteph Stephanie Horbaczewski on x
So #netflix lost 200k subs for the first time in a decade (bc of Russia) + competition= to monetize existing users better. Adding share fees for accounts they could see $1.6b in revenue @xpangler https://variety.com/... via @variety
@sub8u Subrahmanyam Kvj on x
First we blame content costs. Then we blame competition. Then we blame sleep. Then we blame users. “Netflix said that members who are sharing their login credentials outside the home are contributing to its slowing growth in 2022” https://variety.com/...
@maxwindiff Max Ng on x
Netflix has been making noise around password sharing for a few months. I guess next time I see a company focusing on “cutting losses” that much, it's a sign to sell. https://twitter.com/...
@rakeshlobster Rakesh Agrawal on x
ONLY 1/3 of $NFLX use is from shared passwords? These are some grim numbers. No wonder they're looking at ad supported. Could segment off catalog titles. https://www.axios.com/...
@tinch @tinch on x
My prediction is this is the beginning of the streaming fatigue phase, especially after 2 years of lockdown bingeing. We're all exhausted by all the things to watch on all the streaming apps. It's a phase that will dip in and out, but will be a constant. https://twitter.com/...
@michael_boamah Michael Boamah on x
@Lucas_Shaw 2015: we need to become HBO 2017: our competition is Fortnite 2019: we only compete against sleep 2021: stop sharing passwords 2022: come back please
@lucas_shaw Lucas Shaw on x
Netflix says it will test how to curb password sharing over the course of this year, and will roll out its solution globally some time next year.
@elisasileb Elisa Sabattini on x
@Techmeme @xpangler Netflix's offering is like the young and trendy version of Murdoch's Sky platform, to me. And the account sharing feature has been given as default. Bad move.
@alexweprin Alex Weprin on x
Advertising, password sharing crackdowns and a “pulling back” of content spend. This Is Netflix's most consequential quarter in years. https://twitter.com/...
@sundeep Sunny on x
$1b+/month in lost revenue! https://twitter.com/...
@jtylerconway Tyler Conway on x
Netflix is gonna fuck around and test us like we didn't all didn't spend our formative years using torrents???? https://twitter.com/...

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