Netflix now has nearly 270 million subscribers after another strong showing at the start of 2024

• Post by: Admin
• Apr 19 2024

Netflix added another 9.3 million subscribers earlier in the year as profits soared with the help of a yet-to-be advertising expansion, but surprised investors with a change that will make it harder to predict future growth in video streaming service

Netflix now has nearly 270 million subscribers after another strong showing at the start of 2024

Netflix added another 9.3 million subscribers earlier in the year as profits soared with the help of a yet-to-be advertising expansion, but surprised investors with a change that will make it harder to predict future growth in video streaming service

Netflix added another 9.3 million subscribers earlier in the year as profits soared with the help of a yet-to-be advertising expansion, but surprised investors with a change that will make it harder to predict future growth in video streaming service.

The performance announced Thursday showed that Netflix is still building on the momentum of last year, when a crackdown on freeload viewers who relied on shared passwords and the introduction of a low-cost option, including commercials, boosted growth after a lull revived after the pandemic.

The strategy resulted in Netflix adding 30 million subscribers last year - the second-largest annual gain in the service's history.

Netflix's January-March gains more than quadrupled the 1.8 million subscribers the video streaming service added at the same time last year and were nearly three times what analysts had forecast. The Los Gatos, California-based company ended March with nearly 270 million subscribers worldwide, including about 83 million in its largest market, covering the U.S. and Canada.

Investors are increasingly viewing Netflix as the clear winner in a bitter streaming battle involving Apple, Amazon, Walt Disney Co. and Warner Bros. Discovery - a conclusion that has caused its stock price to more than double since the end of 2022 has.

But Netflix surprised investors by announcing in a shareholder letter that it will stop providing quarterly updates on its subscriber numbers starting next year, a move that will make it harder to track the growth - or decline - of video streaming service. Since going public 22 years ago, the company has regularly published its quarterly subscriber numbers.

Shares of Netflix fell more than 5% in extended trading despite its strong financial position.

In a video meeting with analysts, Netflix co-CEO Greg Peters said management believes the company's financial growth has become more meaningful than quarter-to-quarter fluctuations in subscriber numbers.

“We believe this is a better approach that reflects the evolution of the business,” Peters said.

The company still intends to provide annual updates on the total number of subscribers. This plan suggests that Netflix is trying to get investors to focus on long-term trends rather than three-month gains, which can be affected by short-term factors such as programming changes and household budget pressures that lead to temporary cancellations, Raj said Venkatesan, a business administration professor at the University of Virginia who studies the video streaming market.

With Netflix cracking down on password sharing for more than a year now, management is also likely aware that it has reaped most of its subscriber profits from these measures and is aware that it will be more difficult will maintain this momentum, said eMarketer analyst Ross Benes.

“They are giving up while they are ahead by no longer reporting quarterly subscriber numbers,” Benes said.

Netflix's renewed subscriber growth has been accompanied by a greater focus on growing profits and revenue - a focus that has led management to be more cautious in its spending on original programming and to regularly increase its subscription prices.

This formula helped Netflix earn $2.33 billion, or $5.28 per share, in its most recent quarter, a 79% increase from the same period last year. Sales rose 15% year over year to $9.37 billion. Analysts polled by FactSet had forecast earnings of $4.52 per share on revenue of $9.27 billion.

Advertising sales still play a minor role in Netflix's finances. Brian Pitz, an analyst at BMO Capital Markets, predicts the company will generate about $1.5 billion this year from commercials streamed on its service, while predicting steady growth in the coming years. The low-cost ad option has a big impact on attracting and retaining subscribers, said Pitz, who estimates 41 million customers will pay for the commercial format.