Faced with the latest rivals such as Disney and Apple to test streaming services, Netflix’s performance has not reassured investors.
The financial report released after the close of trading on Thursday, 21st Eastern Time shows that in the fourth quarter of 2019, the growth of subscribers in global markets outside the United States in the fourth quarter of 2019 was better than expected. Streaming services Disney Plus and Apple’s Apple TV Plus, Netflix’s subscriber growth was significantly lower than expected, and 30% less than market expectations. Netflix expects to add 11% fewer subscribers in the first quarter of this year than the market expected.
The main data of the financial report are as follows:
- In the fourth quarter, Netflix ’s net increase in paid subscribers was close to 8.76 million. The company ’s own forecast was 7.6 million and the market consensus was expected to be 7.65 million.
- In the fourth quarter, Netflix added 420,000 new paid users in the US market, the market expected 602,500,000, and Netflix itself expected 600,000. In the quarter, 8.33 million new users were added to overseas markets, the market expected 7.15 million, and Netflix expected 7 million.
- In the fourth quarter, Netflix’s operating income was US $ 5.47 billion, the market was expected to be the US $ 5.45 billion, and Netflix was expected to be the US $ 5.4 billion.
- In the fourth quarter GAAP earnings per share (EPS) of 1.3 US dollars, the market expected 0.53 US dollars, Netflix had previously expected 0.51 US dollars.
Netflix said that with the exception of the United States and Canada, the net increase in paid subscribers in the rest of the world was a record high. Most of the new users are in overseas regions, and the total number of overseas paying users has reached 106 million.
In terms of performance guidance, Netflix estimates that EPS for the first quarter of 2020 will be $ 1.66, with operating income of $ 5.73 billion, and 7 million new paid users, while analysts expect EPS to be $ 1.20, operating income of $ 5.76 billion, and 7.86 million new users.
Netflix also expects a net cash outflow of $ 1.7 billion in the first quarter and a net outflow of about $ 2.5 billion for the full year of 2020, but still hopes that it will “slowly move” towards net cash flow inflows in the future.
In a letter to shareholders, Netflix explained that the slow growth in subscribers in the United States and Canada stems from Netflix’s recent price increases and the recent launch of competing for streaming platforms. Outside the United States, the impact of competing products is even weaker.
The comments pointed out that it is worth mentioning that Netflix rivals such as Disney have not launched streaming competitions globally.
According to public reports, in addition to the United States, Disney Plus has now landed in Canada, Australia, and New Zealand, and will land in the United Kingdom, France, Germany, Italy, Ireland, Spain, Austria and Switzerland on March 24.
Apple TV + currently covers more than 100 countries. Netflix is currently available in more than 190 countries, and a standard package in the United States costs $ 13 per month. Apple TV + costs $ 5 a month and is free for a year on select Apple devices. Disney + costs $ 7 a month in the US and Canada, and bundles with ESPN + and Hulu cost $ 13 a month.
Investing.com analyst Haris Anwar commented that the large-scale content and marketing budget for streaming services is only reasonable when there is strong growth in new subscribers. If such user growth cannot be achieved, the stock price will reflect this burnout Reality.
After the announcement of the fourth-quarter financial report, Netflix’s stock price fluctuated after the market. The decline quickly expanded, and once fell more than 1%, and then rose again. By the time of publication, it had risen more than 2% after the market.