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Netflix gains 7% as Q2 profits beat, subscriber losses not as bad as feared

Jul. 19, 2022 4:10 PM ETNetflix, Inc. (NFLX)By: Jason Aycock, SA News Editor85 Comments

Entertainment Industry Workers Vote To Strike, Threatening Hollywood Productions

Mario Tama/Getty Images News

Netflix (NASDAQ:NFLX) is 7% higher after hours as it kicked off earnings season in Communication Services stocks by topping its guidance with a smaller-than-expected loss in subscribers (but still another decline).

The streaming pioneer saw

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Comments (85)

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No mention anywhere of their public break from the woke culture and woke programming.
It's amazing that they never had better controls over users improperly sharing passwords. Probably cost them a fortune over time.
nerd_rage profile picture
@Arthur Shatz Their attitude for years was "who cares, it's great marketing." Their competitors don't care either. If password sharing was such an economic drain, then why did NFLX spend years not caring and why do competitors not care at all?

I think this is mainly scrambling and desperation. NFLX knows they won't make much $$$ off this crackdown but they need to be seen to be doing something because their actual problem - inability to be as efficient in content spend as competitors who have big IP - isn't something they can actually solve.
Cathy Wood profile picture
Terrible numbers but love the price action
Gives me room to short
So now profits matter but subscriber losses are ignored? Isn’t the whole story stock about subscriber gains?

This market is still in a euphoria phase.
@SomeGuy14 They weren't ignored. The stock dropped hundreds of dollars on the 2 million loss projection. I guess the market thought it was over sold when they only lost 1 million. Makes sense.
nerd_rage profile picture
@SomeGuy14 What they really should pay attention to is ARPU. They're losing subscribers in their most lucrative markets and gaining them in their least lucrative markets. They need a strategy for defending their lucrative markets against competition and holding down content costs in the least lucrative but I didn't hear anything on either topic.
Dumb. Have fun with the recession...
This should be a boon for the rest of the sector if even this pick is performing.
@VinnV You're thinking about Roku, Warner and stuff? Yes, maybe.
GR Value profile picture
Netflix $600 to $200 = 66% loss - 20% to inflation since the high.

Yeah great strat. Buy at $250 before $125 also,
$CLU profile picture
19 Jul. 2022
It just means that All other streaming services will be following suit for shared accounts and ads.
"Well, I'll just leave them all!"
You go right ahead there. No one will miss your indignant attitude.
@$CLU exactly. Life will go on without them.
nerd_rage profile picture
@$CLU Ads, yes. Some of them already have ad-based tiers. That's not a competitive advantage for NFLX.

Password sharing, hmm. Competitors don't seem to care, isn't that odd? I think that means this isn't much of an issue to begin with. Just a smokescreen to distract us from the real problem.
Nice. Let's squeeze shorts until December or even longer.
Revenue up 8.6% yoy, but content assets up 19.2% yoy. Three ways to view this:

*Invested heavily into future growth, which will return in a big way
*Invested heavily, and got relatively little in return
*Accounting is suspect
nerd_rage profile picture
@Dukebailey Future growth is in low-ARPU regions while the most lucrative market, North America, is being hit most heavily with competitive pressures (which are bound to percolate outwards to the rest of the world). If content spend continues unabated, this isn't going to work long term. Growing in lower-ARPU regions requires more budget discipline so let's hear about that. And maybe ad-based tiers and possibly password crackdowns will help, but get spending under control too.
@nerd_rage I question the accounting - the last 12 months adjusted FCF is just over $100 million, but the Net Income over the same time frame is $5.1 billion. 🤔
@Dukebailey They mentioned in the ER that covid caused anywhere from 5 to 10% increase in content costs. While that doesnt fully reconcile what your looking into, it does close the gap.
ErikInvest profile picture
Suicide stock
101VET profile picture
Don’t underestimate Asian subscribers. There is a lot of content on Netflix dealing with Asian culture. Each country that has something on Netflix it’s actually a point of pride.
Z Hu profile picture
@101VET Asian countries have SO many other online sources for the same content. Either pirated or legal.
Winnertakesall profile picture
This is a very cheap stock....
@Winnertakesall by what measure? for a 1% fcf yield only growing top line due to price increases and losing subs (for now)
Djreef1966 profile picture
This should help the entire sector.
@Djreef1966 LOL how?? this still awful news. Its showing a former growth beast is now done growing....
Longbow Archer profile picture
@1winner 9% growth on a 19% comp is done growing?

They are growing slower and guidance is lower.
@Longbow Archer they lost 1M subs!!! Hello…the only reason this not a rev decel is bc they massively increased prices
Longbow Archer profile picture
FCF positive again. Keep it up Reed.
not sure this the all clear to go ALL IN on the markets unfortunately. basically it shows that things are bad, and will continue to get bad
Cristi_an profile picture
maybe the next ERs are “not as bad as expected” and will fuel an amazing rally
nerd_rage profile picture
There's no point of NFLX saying "it's so unfair, if the dollar wasn't so strong, it would be X." Well you're a global company and you have to take the strong dollar into account in making decisions about your overseas business. Raise prices or control content costs or both.
@nerd_rage you look mad they are providing disclosures..how much you lost on your puts?
@nerd_rage it does matter to the extent currency ratios are cylical in that the future may see trends in the other direction.

A model that considers currency is gonna be stronger than one that doesn't. The USD is at a 20 year high vs euro.

Now in other markets I don't know how likely directions are to change. Most of lat am seems to love their socialism.

Overall I see nothing to be excited about for Netflix investors. Time to hitch to Tesla folx, yeehaw
@Aceinmysleeve ugh how about an ER that didnt crash the stock price?
PDXGuy profile picture
Would Bill Ackman buying now? I follow him what he does.
Gerrymander profile picture
using "not as bad as feared" is always a glowing review
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