Netflix Stock Price and Forecast: Where will NFLX go after earnings beat coupled with subscriber collapse?
- NFLX collapses 21% on earnings release as subscriber numbers disappointed.
- Netflix forecasts also disappoint the street.
- Netflix did actually beat EPS and matched revenue estimates.
Netflix (NFLX) shares collapsed on Thursday after the close as the company disappointed on subscriber additions in Q4 and its forecast for Q1 2022. Netflix shares are currently trading at $403.39 for a drop of 20.6% in Friday's premarket. The shares closed the regular session on Thursday at $508.25.
Netflix Stock News
The initial release looked good. Netflix beat estimates for EPS, and revenue was in line. EPS came in well ahead of estimates at $1.33 versus the $0.88 consensus. Revenue hit $7.71 billion, just in line with forecasts.
However, things got worse when Netflix released its forecasts, and this is what markets focused on as always. Markets generally are forward-looking, so the EPS forecast of $2.86 for Q1 2022 was well behind previous expectations for $3.45. Netflix also forecasts revenue to hit $7.903 billion in Q1, again behind the previous forecasts for $8.08 billion.
It was the subscriber guidance that really stuck the knife in. Netflix added 8.28 million subscribers in the fourth quarter, which was below its expectations for 8.5 million but more or less in line with Wall Street analyst estimates for 8.32 million subscriber additions. Netflix forecasts subscriber growth to slow to just 2.5 million additions in Q1, while analysts were forecasting nearly 6 million subscriber adds for Q1. This was the real show stopper of the earnings release and the main reason behind the stock's 20% fall.
Netflix has faced increased competition in the streaming market particularly from Disney (DIS). Disney fell 4% as investors saw falling subscriber numbers as a sector-wide issue perhaps. Netflix has recently been raising prices, while Disney did have some attractive sign-up offers to help maintain high subscriber growth. Now that economies and countries are reopening, people may find other means of entertainment. Other lockdown stocks have been facing similar issues, and Peloton (PTON) shares collapsed 24% yesterday on rumours of production stopping due to high inventory levels.
Netflix Stock Forecast
NFLX stock crashed through the last important support at $467 and that has led it to target $400. Also note the volume gap below $478, which does not increase again until $380. All you bottom-falling knife catchers take note, there may be more to come just yet.
Netflix (NFLX) chart, weekly
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
