Netflix Bounces Back After a Period of Slowdown

    Streaming platform Netflix is back on track after adding 2.41 million customers in the third quarter. The company surpassed internal forecasts as well as expectations from Wall Street.

    In a letter to its shareholders, the company said that its subscriber base increased worldwide, expecting to sign up an additional 4.5 million subscribers in the current quarter.

    The most popular TV network in the world is showing a positive trajectory though the growth is not as quick as it was a couple of years back. More customers are subscribing to the streaming platforms than a year ago. This is good news for Netflix investors and peer companies, as they had suffered deep losses in the stock market earlier this year.

    Netflix shares rose to $278.94, up by 16% after the results were declared. The Stock, however, remained down 60% this year till Tuesday’s Trading. Other streaming companies, including Walt Disney and Roku Inc., share prices also increased.

    A strong program catalog attracted millions of new viewers in the third quarter. New episodes of Stranger Things, a popular global TV series, and Extraordinary Attorney Woo, a Korean super hit, along with movies The Gray man and purple hearts, were released in this period.

    Netflix’s Revenue grew to $7.93 billion, up by 5.9% for the quarter and beating analysts’ forecasts. Profit of $3.10 a share also surpassed estimates, and the number of paying viewers increased to 223.1 million.

    Dollar Dilemma

    Netflix lost 1.2 million customers during the first half of 2022, and even though the growth has been there, it will not be easy going forward. The customer base has shrunk in the US this year, and investors are reconsidering their investments in Streaming platforms.

    The dollar strengthening against other currencies has also hit the revenues and profitability. Netflix said that it would adjust pricing and content spending. The company estimated $7.78 billion in sales in the fourth quarter, which is short of Wall Street analysts estimates, projected at $7.98 billion.

    Earnings per share are 36 cents which are well short of $1.20 estimated by Wall Street, prompting Chief Financial officer Spencer Neumann.

    New Initiatives 

    Co- CEOs of Netflix, Reed Hastings, and Ted Sarandos, however, say that their TV channels have plenty of room for growth. The streaming service has about 8% of the market share in the US and UK and is profitable, unlike most of its rivals.

    Netflix management is coming out with an ad version of the subscription plan in November, and it will be charging for password sharing from next year. Customers will pay $7 less monthly if they can watch five minutes of advertising per hour, which is less than half the cost of its most popular plan.

    The lower priced subscription tier will help to attract new customers and reduce cancellation of existing services. With the viewership of traditional live TV channels declining, Netflix feels it can capture this market space worth billions of dollars.



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