Netflix Slides After Results Suggest Pandemic Boom Is Waning, , on October 20, 2020 at 11:51 pm

Financial News
By
On October 20, 2020
In Financial News
Tags:

(Bloomberg) — Netflix Inc. tumbled in late trading after missing Wall Street’s estimates for subscribers, renewing doubts about its ability to maintain growth as pandemic lockdowns go away and competition intensifies.The world’s largest paid streaming service added just 2.2 million new subscribers in the third quarter, well short of the 3.32 million predicted by analysts, as well as the company’s own more conservative projection. Netflix also predicted that it will sign up 6 million new subscribers this period, below the 6.54 million Wall Street estimate.Netflix added 25.9 million customers in the first half of the year, its strongest start ever. Yet throughout the pandemic, the company has warned that the subscriber boom wouldn’t last — and in fact, that its surge in new customers could suppress growth in the future.“We expected and knew there would be some level of slowdown,” Chief Financial Officer Spencer Neumann said during a video discussion after the results were released.But predicting subscriber growth in such a climate has proved trickier than ever. While Netflix’s forecasts for the second quarter proved too cautious, its outlook for the third quarter was too rosy.Many viewers — especially in Europe and Asia — have returned to something closer to normal day-to-day life, reducing the amount of time they can spend on Netflix binges. And pro sports have returned to Americans’ TV screens. All of that hampered subscriber gains last quarter, with growth suffering in all three regions.“It’s the sign of a maturing business,” said Jim Nail, an analyst at Forrester Research. “Infinite growth can’t go on forever.”It was Netflix’s weakest third-quarter gain since 2015, back when the company wasn’t yet operating in most of the world. In its letter to investors, management blamed a “pull forward” effect: Rapid growth in the first half of the year stole from results in more recent months. The streaming service also warned investors that it would see slower growth in the quarters ahead.Netflix shares fell as much as 7.4% to $486.50 in after-market trading. The stock had been up 62% this year through Tuesday’s close, giving the company a market value of $231.7 billion.Program PipelineNetflix has still outshined many TV networks and services, which have struggled to find new programming to air during the pandemic. The company has released a full slate of movies, TV shows and documentaries. And through nine months of 2020, the Los Gatos, California-based company has added 28.1 million paid memberships, topping all of last year.The company is on pace to add 34 million users in 2020, its strongest year of growth ever, and surpass 200 million customers in total.Movies and documentaries were a bright spot in the quarter. “The Old Guard,” an action film starring Charlize Theron, was its most-watched title in the third quarter, followed by two other features, “Project Power” and “The Kissing Booth 2.” “American Murder: The Family Next Door,” released in September, is on pace to be the service’s most-watched documentary ever.The performance of its original series was less strong, which may help explain why the company just restructured its TV division. And its most popular shows are still primarily in English, potentially limiting its overseas expansion.Netflix played down the impact of the pandemic on its pipeline of new shows. The company said it has completed 50 projects since the initial shutdown in production, and it will release more programs next year than it did in 2020.“We’re confident that we’ll have an exciting range of programming for our members, particularly relative to other entertainment service options,” the company said.Saving CashThe slowdown in production does mean Netflix will post positive annual free cash flow for the first time in years. Though the company reports a profit, it has still been burning through cash to fund its expansion into new territories and its production of new programs.While the company said free cash flow will be negative next year, it won’t need to borrow much money anymore. It now has enough cash on its balance sheet to fund its operations for more than 12 months.For years, critics have said Netflix will run out of money. That danger now appears to have passed. More and more, the company looks like a stable studio — and increasingly, a dominant force in Hollywood.“We can safely say we can self-finance our growth without accessing capital markets,” Netflix’s Neumann said.(Updates with executive comments starting in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,

Netflix Slides After Results Suggest Pandemic Boom Is Waning(Bloomberg) — Netflix Inc. tumbled in late trading after missing Wall Street’s estimates for subscribers, renewing doubts about its ability to maintain growth as pandemic lockdowns go away and competition intensifies.The world’s largest paid streaming service added just 2.2 million new subscribers in the third quarter, well short of the 3.32 million predicted by analysts, as well as the company’s own more conservative projection. Netflix also predicted that it will sign up 6 million new subscribers this period, below the 6.54 million Wall Street estimate.Netflix added 25.9 million customers in the first half of the year, its strongest start ever. Yet throughout the pandemic, the company has warned that the subscriber boom wouldn’t last — and in fact, that its surge in new customers could suppress growth in the future.“We expected and knew there would be some level of slowdown,” Chief Financial Officer Spencer Neumann said during a video discussion after the results were released.But predicting subscriber growth in such a climate has proved trickier than ever. While Netflix’s forecasts for the second quarter proved too cautious, its outlook for the third quarter was too rosy.Many viewers — especially in Europe and Asia — have returned to something closer to normal day-to-day life, reducing the amount of time they can spend on Netflix binges. And pro sports have returned to Americans’ TV screens. All of that hampered subscriber gains last quarter, with growth suffering in all three regions.“It’s the sign of a maturing business,” said Jim Nail, an analyst at Forrester Research. “Infinite growth can’t go on forever.”It was Netflix’s weakest third-quarter gain since 2015, back when the company wasn’t yet operating in most of the world. In its letter to investors, management blamed a “pull forward” effect: Rapid growth in the first half of the year stole from results in more recent months. The streaming service also warned investors that it would see slower growth in the quarters ahead.Netflix shares fell as much as 7.4% to $486.50 in after-market trading. The stock had been up 62% this year through Tuesday’s close, giving the company a market value of $231.7 billion.Program PipelineNetflix has still outshined many TV networks and services, which have struggled to find new programming to air during the pandemic. The company has released a full slate of movies, TV shows and documentaries. And through nine months of 2020, the Los Gatos, California-based company has added 28.1 million paid memberships, topping all of last year.The company is on pace to add 34 million users in 2020, its strongest year of growth ever, and surpass 200 million customers in total.Movies and documentaries were a bright spot in the quarter. “The Old Guard,” an action film starring Charlize Theron, was its most-watched title in the third quarter, followed by two other features, “Project Power” and “The Kissing Booth 2.” “American Murder: The Family Next Door,” released in September, is on pace to be the service’s most-watched documentary ever.The performance of its original series was less strong, which may help explain why the company just restructured its TV division. And its most popular shows are still primarily in English, potentially limiting its overseas expansion.Netflix played down the impact of the pandemic on its pipeline of new shows. The company said it has completed 50 projects since the initial shutdown in production, and it will release more programs next year than it did in 2020.“We’re confident that we’ll have an exciting range of programming for our members, particularly relative to other entertainment service options,” the company said.Saving CashThe slowdown in production does mean Netflix will post positive annual free cash flow for the first time in years. Though the company reports a profit, it has still been burning through cash to fund its expansion into new territories and its production of new programs.While the company said free cash flow will be negative next year, it won’t need to borrow much money anymore. It now has enough cash on its balance sheet to fund its operations for more than 12 months.For years, critics have said Netflix will run out of money. That danger now appears to have passed. More and more, the company looks like a stable studio — and increasingly, a dominant force in Hollywood.“We can safely say we can self-finance our growth without accessing capital markets,” Netflix’s Neumann said.(Updates with executive comments starting in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

,

Instant Quote

Enter the Stock Symbol.

Select the Exchange.

Select the Type of Security.

Please enter your First Name.

Please enter your Last Name.

Please enter your phone number.

Please enter your Email Address.

Please enter or select the Total Number of Shares you own.

Please enter or select the Desired Loan Amount you are seeking.

Please select the Loan Purpose.

Please select if you are an Officer/Director.

High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

Please read the notice above and check the box below to continue.

Singapore

168 Robinson Road,
Capital Tower, Singapore 068912
+65 3105 1295

Taiwan

5th Floor, No. 1-8, Section 5, Zhongxiao East Road, Taipei

Hong Kong

R91, 3rd Floor,
Eton Tower, 8 Hysan Ave.
Causeway Bay, Hong Kong
+852 3002 4462

Australia

44 Martin Place, Sydney 2000 Australia
+02 8319 3232

Indonesia

Millennium Centennial Center, 38th Floor, Jl. Jend. Sudirman Kav. 25
Jakarta 12920, Indonesia

Market Coverage