King Jean Page and Phoebe Dynevor star in Netflix’s “Bridgerton.”
Netflix
Investopedia defines a “correction” as “a 10% or greater decrease in the price of a security, asset or financial market”.
This was Netflix’s quarterly fix.
Shares fell more than 10 percent hours after Netflix announced it had added just under 4 million subscribers in the first quarter – missing the company’s 6 million forecast. Netflix also said it expects only 1 million net additions paid for the second quarter. To put this in perspective, Netflix added 10 million subscribers in the second quarter of last year.
Netflix benefited from increased demand for its streaming service in the first six months of the pandemic, adding nearly 26 million subscribers in the first six months of 2020. The company did not see these gains coming at that time and now underestimated the withdrawal. as the pandemic seems to subside.
However, there is room for long-term Netflix bulls to remain optimistic. The company says it expects subscriber growth to accelerate in the second half of 2021 as a number of new shows and movies become available due to pandemic shutdowns. In addition, average revenue per user continues to grow in all regions of the world. The average user in the US and Canada now pays $ 14.25 per month for Netflix, up about 9% from a year ago.
Forecasting just 1 million new subscribers for the next quarter may be conservative guidance, as Netflix, along with the rest of the world, readjusts to post-pandemic life.
International growth and APRU earnings will likely be what will drive Netflix shares even higher if the company can deliver.
This quarter brought the Netflix pandemic revolt to the ground. If the theme of the second half of the year is a return to reality, this is probably good news for Netflix. The reality was quite kind to co-CEO Reed Hastings.
SEE: Alex Sherman from CNBC and NYT Ed Lee discuss Netflix earnings