Netflix shares sank more than 10 per cent on Friday after the company forecast another quarter of slower revenue gains and scaled back viewership data, fueling fears that its industry-beating growth may have peaked.
The stock was close to a two-year low in early trading, with the decline set to wipe out $35 billion (€30.6 billion) from Netflix’s market value of about $313 billion, if losses hold.
In its latest disclosure pullback, the streaming giant cut the frequency of its viewing-hours report to once a year from twice starting in 2027, following last year’s scrapping of subscriber counts, leaving investors in the dark as the business faces greater competition from traditional media as well as YouTube.
“Whenever you take away a data point from investors when results aren’t as good as they have been you will get punished by the market,” said Ben Barringer, head of technology research at Quilter Cheviot.
Netflix stock has declined more than 40 per cent over the last year, as the company’s failed pursuit of Warner Bros Discovery and subsequent financial results caused investors to worry that the leader in streaming has lost momentum.
Netflix forecast a second consecutive quarter of slowing sales growth, contributing to investor anxiety about the streaming giant’s future. The company projected revenue of $12.9 billion (€11.27 billion) in the current quarter and earnings of 82 cents per share, both slightly shy of analysts’ expectations.
While Netflix still has more subscribers and viewership than any other paid streaming service, its sales growth has slowed. Netflix endured a months-long drought of new hits in the first half of the year, during which many returning shows struggled to retain viewers in the new seasons.
The company sought to reassure restive investors by outlining a plan to sustain growth in the coming years and touting recent hits such as I Will Find You, an adaptation of a Harlan Coben novel, which was Netflix’s most-viewed new original series this year.
The company reported second-quarter sales of $12.6 billion and earnings of 80 cents a share, in line with Wall Street’s consensus.
“We don’t manage the business on a quarter-to-quarter basis,” chief financial officer Spencer Neumann said on a call with analysts.
Netflix has only reached about 45 per cent of its addressable market and accounts for just 5 per cent of global TV viewing, he said. The company will add $6 billion in sales this year.
Netflix is investing in new kinds of programming, such as live sports and video podcasts. Podcasts are attracting more viewers during the day and on mobile devices, while live programming has helped bring in a lot of customers relative to its actual share of viewing, the company said.
Netflix has announced a flurry of new deals with popular social media personalities in recent weeks, including YouTube stars Alan Chikin Chow and Nick DiGiovanni, and just rolled out a partnership with French broadcaster TF1.
The company’s total spending on programming will grow about 10 per cent this year, slightly more than the average of the past few years. The company also touted its use of generative artificial intelligence on about 300 shows. - Reuters/Bloomberg
