Netflix shares fall as investors look to exit after earnings report

William Huston, AIF®, AIFA®

by in Published on January 21, 2022
Netflix shares fall as investors look to exit after earnings report

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Netflix shares fall as investors look to exit after earnings report

Netflix shares lost more than a fifth of their value on Friday after Internet TV missed its target for new subscribers in the final quarter of last year and fell short of expectations for the current quarter. In this morning's trading, Netflix shares fell 23% to 391.60. Netflix shares have fallen since late November on fears of a growth slowdown. It hit an all-time high of 700.99 on Nov. 17.

Los Gatos, CA-based Netflix said Thursday night that it added 8.28 million new subscribers in the December quarter, just below its target of 8.5 million. In the current quarter, Netflix is expected to add 2.5 million new subscribers. However, analysts were expecting 5.8 million net additions in the first quarter. Netflix ends 2021 with 221.8 million subscribers worldwide, 34% of which are in the United States and Canada.

Wall Street is upset with Netflix shares

At least nine Wall Street analysts downgraded Netflix stock following its fourth-quarter earnings report. Of those, eight have downgraded from a buy rating to a neutral rating. One brokerage firm, Macquarie, downgraded its rating from neutral to unfavorable. Meanwhile, several analysts have cut their price target on NFLX stock, some by $200 or more.

On the bright side, Netflix posted better-than-expected earnings thanks to solid online sales in the December quarter.Netflix earned $1.33 per share on $7.71 billion in revenue in the fourth quarter. Year over year, earnings grew 12%, while sales grew 16%. Analysts had expected earnings of 83 cents per share on revenue of $7.71 billion.

In the first quarter of the year, Netflix was expected to earn $2.86 per share on revenue of $7.9 billion. This resulted in a 24% drop in earnings year over year as revenue grew 10%.

SOURCE

Seitz, P. (2022, January 21). Netflix Stock Crashes As Investors Head For The Exits After Earnings Report. Investor’s Business Daily. Retrieved January 21, 2022, from https://www.investors.com/news/technology/netflix-stock-crashes-after-fourth-quarter-report/?src=A00220

William Huston, AIF®, AIFA®
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