The decline of Netflix shares in the stock market

Netflix has presented its results this April, showing a decline in its shares by more than 10% for the first quarter of 2021, which is known as a correction in business terms. The company reached a minimum of $489.28 per share, decreasing its market value by approximately 25,000 million US Dollars.

This news has been without a doubt something unexpected for one of the great technology companies of Wall Street, part of the FAANG (Facebook, Amazon, Apple, Netflix, and Google), which forecasted for the first quarter of 2021 the subscription of 6 million new users, but ended up receiving less than 4 million.

The demand for streaming services in 2020 soared due to the pandemic, causing Netflix to receive more than 20 million new subscribers in the first 6 months, much of them from Asia. However, now that the pandemic appears to be winding down, the company did not expect the decline in earnings, added to the lack of new programs and the standstill in its own production division.

As if that were not enough, competition in the sector has increased and has become more aggressive, especially from the side of new platforms that have recently entered the market such as Disney+, which already has 100 million subscribers, almost half of Netflix’s.

Thus, Netflix now expects a slow subscription growth in the first half of 2021, forecasting just 1 million new subscribers for the next quarter, way below the 5 million forecasted previously.

However, not everything is bad news: Netflix expects a reacceleration in subscriber growth from the second half of 2021 onwards, mainly due to the premiere of seasons of successful shows, and movies the production of which were delayed by the pandemic. Moreover, the average revenues per user keep growing in all regions of the World, such as in the US and Canada, where now they pay $14.25 per month, a 9% increase from a year ago.

“Netflix is reassuring investors that they do expect growth to accelerate in the second half of this year” – Alex Sherman, Technology Reporter for CNBC.

Do you think Netflix will once again have the stable growth it has had for the last 10 years?