Published: Fri, April 21, 2017
Culture | By Stewart Greene

Netflix Shares Fall on Weak Subscriber Growth: What Wall Street's Saying

Netflix Shares Fall on Weak Subscriber Growth: What Wall Street's Saying

The company expects to reach this milestone over the coming weekend, if its projections remain on course.

The service added almost 5 million subscribers during the first three months of the year in roughly 190 countries. On average, equities research analysts expect that Netflix will post $1.11 earnings per share for the current year. "But Netflix clearly had a vision before those devices became so ubiquitous". For the entire second quarter, it expects to add 3.2 million subscribers overall, boosting its global total to almost 102 million. We now model a 17% average annual decline in total adds from 2017 to 2021 with a 21% decrease in 2017, but our projections (and consensus) may prove optimistic and problematic for the firm. The earnings report predicts Netflix aims to have a total of 101.95 million memberships by the end of Q2, with the company's executives stating Netflix will break the 100 million total membership barrier by this weekend.

Netflix says the opportunity ahead remains "gigantic" despite a slowdown in subscriber numbers, including global markets.

Based in Los Gatos, California, Netflix now has a market value of approximately $63 billion. Starting this year, we can be primarily measured by revenue growth and (global) operating margins as our primary metrics. Other cable channels also are contributing internet-only benefits as more viewers, particularly younger people, avoid traditional TV bundles and subscribe to streaming services preferably.

"Buttressing this activity is the substantial earned media coverage around the Netflix brand, technology and content we generate globally through events and activities aimed at journalists and social media influencers". Both Amazon and Netflix have also been investing heavily in original programming to win subscribers to their on-demand video services.

However, user growth is a more important metric for a growth company like Netflix.

The model works from a customer viewpoint because it is such a great value, Pachter said. Breaking that total down, the OTT video market leader picked up 1.42 million subscribers in the United States and the other 3.53 million customers internationally, raising its totals in those regions to 50.85 million and 47.89 million, respectively.

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