MarketWatch First Take: Netflix stock could be even more volatile around future earnings, thanks to this change

by | Oct 18, 2022 | Stock Market

Already a volatile stock during corporate earnings season, Netflix Inc. is likely to be even more so in the future after a decision made by the streaming service’s executives. Starting next quarter, executives will no longer give a forecast for new subscriber additions, the component of its financial results that is most closely watched by analysts and investors. Netflix
executives said in their quarterly letter to shareholders Tuesday that they want investors to instead focus on revenue. Full earnings coverage: Netflix CEO says ‘thank God we’re done with shrinking quarters’ after first growth of 2022

“We have been increasingly focused on revenue as our primary top-line metric,” said Spencer Wang, Netflix’s vice president of investor relations, during the company’s analyst interview Tuesday. “And this is going to be, I think, even more important as we head into 2023 and we develop new revenue streams, like advertising and paid sharing, where membership growth is only one aspect of the revenue picture.” There are multiple problems with that plan, starting with the fact that anytime a company stops reporting or guiding on a metric that Wall Street relies on, you can bet that it’s because the number is not going to be good, or is in decline. Read about how Apple stopped reporting product unit sales. Focusing on revenue is not great for Netflix investors right now either, considering its year-over-year revenue growth in the third quarter was the lowest Netflix has ever rep …

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