After the exponential growth of the last two years on the stock market, during the Covid-19 pandemic, Netflix now loses its “rating” on NASDAQ. Its shares have fallen 66.82% this year but since peaking in November last year, they have lost nearly three-quarters of their value.
The online content company, once the king of the business, today tries to refocus its strategy to remain attractive, while looking for new strategies to stop the drop in the number of subscribers and attract new ones, while social confinement has been relaxed in the world.
The course that the platform has decided to take does not seem to convince investors, who have imposed a rigorous punishment on its shares on the Stock Exchange, as they have gone from $691.69 (their maximum reported on November 17, 2021) to $199.87.
The disappointment of the market came after it announced that the number of subscribers would be reduced this year. In fact, in the first three months it has already registered a loss of 200,000 subscribers when it estimated to add 2.5 million. While his income increased 10%, to 7,870 million dollars, compared to the same period in 2021.
In addition, it anticipated pressures on its operating margin, estimating levels of 19 and 20% for the entire year compared to 21% with which it ended 2021.
Netflix, which has 221.6 million subscribers, acknowledges that “competition has intensified in the last two years, as entertainment companies around the world develop their own offer.”
Among its competitors are Amazon.com (-25.47% on NASDAQ this year); Walt Disney (-26.68% on the NYSE) and Warner Bros Discovery (-18.14%).
a lot of offer
“Netflix has steadily gained subscribers over the past decade as it has produced more original content and expanded overseas. Its AI algorithm for analyzing viewing habits has also allowed it to produce new shows and movies without relying heavily on established IP and franchises,” said John Mackey, CEO of Whole Foods Market.
He added that in recent years, well-funded competitors like Disney, Amazon and Warner Bros. Discovery have saturated and fragmented the market. Furthermore, “Netflix’s strong growth during the pandemic masked those competitive threats as more people stayed home, but subscriber and revenue growth slowed as the lockdown ended.”
In the short term, Netflix’s plan is to charge an additional fee for accounts shared between different households, starting in Peru, Chile and Costa Rica.
In order not to lose the signal and continue to beat the drum with its programming, the firm directed by Reed Hastings seeks to expand and strengthen itself with other lines of the entertainment business.
One of its bets is in the lucrative video game business, which according to Fortune Business Insights, the size of the world market stood at 203,120 million dollars in 2020 and is expected to reach 545,980 million dollars by 2028.