The leading streaming network, Netflix, reported its first quarter 2021 results on Tuesday, missing Wall Street’s estimates for new subscribers but beating its revenue and earnings forecasts (Yahoo Finance). The company added 1.75 million subscribers in the quarter, roughly 500,000 less than the expected number of subscribers (Barron’s). As a result, Netflix’s shares fell after-hours after the financial results announcement (The Wall Street Journal).
Moreover, Netflix announced to investors that it would begin cracking down on password-sharing in the US this quarter (MarketWatch). The news brought worries of losing streamers who avoid paying a subscription fee by sharing passwords. Despite the new password-crackdown effort, Netflix’s upper management remains optimistic about its future business plans.
Additionally, the company plans to add a new feature to its interface – an ad campaign – in an effort to diversify its revenue portfolio (MarketWatch). The update is set to introduce a new feature with a variety of exclusive trailers before the selected programming. This option will limit commercial interruptions for streamers while keeping advertisers satisfied with their streaming media plans.
The streaming giant’s earnings update was a mixed bag (The Motley Fool) as it beat Wall Street forecasts for earnings but offered a weaker-than -expected forecast for the quarter ahead (Reuters), generating concerns among investors. Even though Netflix has been a pandemic darling, experts suggest it will face stiffer competition as the world opens up post-COVID (Forbes).
In summary, the mixed results led Netflix shares to drop as subscriber expectations decreased, but future plans, such as the introduction of ads, show Netflix’s determination to continue to diversify and stay ahead of its competition.
