Netflix tumbles as revenue hit overshadows subscriber jump
2023-07-20 - Scroll down for original article
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July 20 (Reuters) - Netflix (NFLX.O) tumbled 7% in premarket trading on Thursday after its quarterly revenue and forecast fell short of estimates, with analysts saying it would take time for the company's new money-making ventures to bring in returns. The video-streaming pioneer, which has been looking for new revenue streams, launched its ad-supported tier last year and cracked down on password sharing globally as it copes with intensifying competition. Analysts said while there was some progress in these ventures, it was still too early to dub them a success. "Netflix needs to squeeze as much juice as it can from different avenues," Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said, adding the market was "realms away from knowing for sure" if the ad-supported venture could be the cash cow Netflix has been selling it as. Inflation was starting to bite its ability to hike subscription prices, as households look to trim spending, she added. Smartphone with Netflix logo is placed on a keyboard in this illustration taken April 19, 2022. REUTERS/Dado Ruvic/ Reuters Graphics The company reported second-quarter revenue of $8.2 billion, shy of analysts' forecasts of $8.3 billion. Third-quarter revenue is estimated to hit $8.5 billion, falling short of estimates of $8.7 billion. "Revenue growth has not hit double digits since the fourth quarter of 2021 despite price hikes and revenue enhancement initiatives like paid sharing and the introduction of ad-supported tiers," Morningstar analysts wrote in a note. The company, whose shares have gained more than 60% so far this year, said it expects revenue growth to accelerate in the second half of 2023 as the full benefits of paid sharing and continued steady growth in the ad-tier shows. Its nearly 6 million subscriber additions vastly outpaced the 1.9 million that Wall Street had expected driven by hit titles as it starts to realize benefits of its crackdown on password sharing. Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Nivedita Bhattacharjee Our Standards: The Thomson Reuters Trust Principles.