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NFLX Stock Down 20% as Netflix Reports Q4 2021 Earnings, Stating Slowing Subscriber Growth

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by Ibukun Ogundare · 3 min read
NFLX Stock Down 20% as Netflix Reports Q4 2021 Earnings, Stating Slowing Subscriber Growth
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Netflix blamed increased competition from other streaming companies for the slowdown.

Subscription streaming service and production company Netflix (NASDAQ: NFLX) declined 20% after the company reported its fourth-quarter (Q4) earnings. After Netflix announced its Q4 earnings after the bell on the 20th of January, it lost the shares in after-hours trading. The fall pulled the company down to its lowest level since June 2010 to slow subscriber growth in the last quarter. Despite the low growth of subscribers in Q4 2021, Netflix achieved several milestones in the year.

Last year, the steamer had its biggest TV show of the year, “Squid Game,” whose valuation was estimated to be worth $900 million. Netflix was also the most Emmy-winning and most-nominated TV network and the most Oscar-winning and nominated movie studio of 2021. Additionally, Netflix had its two biggest film releases of all time in the year, “Red Notice” and “Don’t Look Up.”

Netflix Announces Q4 2021 Earnings

According to the Q4 earnings report, revenue in the quarter increased 16% year-over-year, and average paid membership grew 9%. However, the operating margin dropped 6% compared to the previous year, amounting to 8%. Netflix said the company was expecting a fall in operating margins due to its large content slate in Q4 2022.

Before now, analysts had expected Netflix Earnings Per Share for Q4 2021 to be recorded at 83 cents. However, the streaming service and production said its EPS was $1.33. Revenue, on the other hand, matched analysts’ expectations of $7.71 billion. Furthermore, Netflix recorded an additional 8.28 million global paid net subscribers in 2021 Q4, crossing analysts’ expectations of $8.19 million. Back in 2020 Q4, the company added 8.5 million subscribers, just as it predicted.

Forecasting into the new year, Netflix is expecting fewer subscribers in Q1 2022 than 3.98 million subscribers in Q1 2021. In this current quarter, the company expects to onboard 2.5 million subscribers in Q1 2022, significantly below analysts’ expectation of 6.93 billion, according to estimates by StreetAccount.

Netflix Competes with Other Streaming Services

Netflix blamed increased competition from other streaming companies for the slowdown. The likes of Disney Plus, Amazon Prime Video, and HBO Max are some of the streaming services competing with Netflix. Others include Peacock, Hulu, and Apple TV. All these streamers have been releasing content worthy enough to get the attention of consumers who were originally on Netflix.

Netflix stated:

“Consumers have always had many choices when it comes to their entertainment time – competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering. While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.”

Currently, at premarket trading, Netflix stock is down 20% to $404.11.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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