Netflix sees the popularity of Stranger Things as keeping the hype alive for the band and re-igniting the company’s subscription growth as it reaches the end of the streaming service road.
After the market closed on Tuesday afternoon, the streaming giant reported $3.20 per share earnings that beat analyst estimates of $2.94. However, revenues came at $7.97 billion, slightly below analysts’ estimates, as the company continued to lose subscribers in the second quarter.
Still, the subscriber losses were less than half of the first quarter’s losses, with the company predicting a resumption in growth in the third quarter. That’s thanks to the fourth season of Stranger Things, which revived the hype for the brand.
“Season four of Stranger Things also showcased the effectiveness of our marketing strategy in driving conversation around our titles,” the company said in its shareholder letter. When we deliver shows and movies that members are talking about in large numbers, we can influence pop culture, build passion for Netflix and create an experience that is differentiated and difficult-to-replicate.”
The popular show generated 1.3 billion hours viewed thus far in the new season. That made it Netflix’s biggest 2 season of English TV ever, reviving interest in past episodes.
“Netflix’s earnings were good and beat Wall Street’s estimates,” Anthony Denier, CEO of Webull, told International Business Times in an email. “While revenues didn’t beat estimates, they did rise about 9%. But the big number everyone is looking at is the subscriber losses. After the first quarter, Netflix predicted it would lose two million subscribers this quarter. Instead, it lost less than half that amount, 970 million. This is why the stock is rising in after-hours trading.”
Does it mean that the worse over for the stock? Michael Wang, CEO of Prometheus Alternative Investments, thinks so.
“Beating low expectations, Netflix’s recent earnings report comes on the heels of a disappointing Q2 for tech giants overall,” he told IBT in an email. “Despite guiding below consensus estimates, investors still have hope for the future of Big Tech. Moreover, given the market’s positive reaction to Netflix’s earnings report, it seems clear—at least in the short-term—that the worst is behind them.”
Still, Deiner is cautious about the streaming giant’s future growth.
“It’s forecasting subscriber growth of 1 million in the third quarter, but that’s below Wall Street’s estimates,” said Deiner. “The international market will be an area of growth, but currency headwinds will continue to be an issue. People also need to watch how well the lower-priced tier with advertising takes off. Of course, if there is a recession, more people may stay home and watch TV, which should be good for Netflix. It also says it is addressing the issue of password sharing to raise revenues.”
Published via: International Business Times