Shares of Netflix, Inc. (NFLX) stock continued to fall in the after-market session yesterday after facing the downtrend of 0.88% at the previous closing. NFLX price faced a downtrend of 8.76% to drop at $501.44 a share in the late hours of Tuesday, April 20, 2021. This fall is attributed to the recently announced first-quarter results by NFLX stock in which Netflix subscriber growth sharply decreased. Let’s discuss the recent results in detail.
NFLX stock earnings and revenues:
NFLX stock posted $3.75 earnings per share in the first quarter of 2021 as compared to $1.57 earnings per share in the same quarter of the previous year. The Zacks Consensus estimate for the NFLX was $2.98 earnings per share.NFLX stock has beaten the Zack Consensus estimate of revenue by 0.39% and generated $7.16 billion revenue in the first quarter of 2021 as compared to $5.77 billion in the same tenure of the previous year.Net income of NFLX rose to $1.71 billion from$709 million as compared to the first quarter of 2020.
NFLX stock sharply decreased the Subscriber Growth:
Netflix stock subscribers’ growth decreased sharply in the first quarter of 2021 as it just added 3.98 million subscribers in its database which is very much less as compared to 15.8 million new paying users in the same quarter of the prior year. The first three-month new subscriber number is also less than the NFLX’s own guidance of 6 million from January.
Why subscriber’s growth decreased?
Management thinks that the decreased subscriber’s growth is attributed to COVID-19 which greatly hit the production of T.V shows, and movies thus slowed down the production process. The projected number of new subscribers for the second quarter is just 1 million by NFLX stock while analysts had previously projected it to be nearly 4.8 million.
Management of Netflix is optimistic that its membership growth will again take the rising momentum in the second quarter as it is going to release the new seasons of “You,” “Money Heist,” and “The Witcher” along with the action movie Red Notice,” and many others.
It is obvious that shares of NFLX stock plunged due to decreased subscribers’ growth in the first three months of 2021. Moreover, Netflix is facing great competition as rival media companies are spending billions to compete with it. Management is optimistic that the NFLX stock would again get the rising momentum after releasing blockbuster movies and seasons in the second quarter of 2021. The consensus estimate of revenues for the second quarter is $7.37 billion and $30.01 billion for the fiscal year 2021. In a nutshell, good homework about NFLX stock is necessary for investors.