As Netflix shares decline after earnings, market watchers say this isn’t the end-all quarter for the streaming giant.
Netflix’s story is far from over, according to a smattering of stock market analysts. Shares of the streaming giant fell nearly 7.5% on Wednesday following the company’s first-quarter earnings report. Though Netflix beat earnings and revenue estimates, a large drop in subscribers put a crimp on the stock. However, market watchers including CNBC’s Jim Cramer largely say this isn’t the end-all quarter for Netflix. Tom Rogers, a longtime media mogul who is now executive chairman of Engine Media, said Netflix still has the upper hand in its industry: « I don’t particularly buy the notion that their programming was thin. They’ve done much better in terms of having new programming out there during the pandemic than anybody else. They had some very big shows out there at that point — ‘Bridgerton,’ ‘Lupin.’ But look, it was a surprise that they slowed a little bit. Does it derail the Netflix thesis? No. Remember, two years ago, they missed by over 2 million [subscribers] in the quarter, the stock went down by 10%, and [subscribers] soared from there. Valuations soared from there. Even last year, they had a quarter of only 2 million [subscribers]. This quarter they hit 4 million [subscribers]. So, look, [subscribers] are going to be lumpy. It does suggest it’s not so easy to build subscribers in the streaming world. I think others are going to struggle some with sluggishness even more than Netflix does. But if I had to say would I prefer Netflix’s hand to anybody else’s in the streaming world? Absolutely. » Rich Greenfield, partner and media and technology analyst at LightShed Partners, advised against getting caught up in the Netflix negativity: « This quarter was disappointing. There’s no way around… the guidance even for Q2 being more disappointing than the Q1 results. That said, I want to remind everyone that’s watching today: This has happened before, many times, actually. The reality is forecasting Netflix on a quarterly basis has become increasingly more challenging as the subscriber base has grown. The size of the beats and the size of the misses have grown pretty notably. I mean, if you go back, I remember being on ‘Squawk’ in the middle of 2019 after that Q2 print. We tend to all have a habit of overextrapolating any one quarter and trying to change the entire future of where the world is going. I think if you take a step back, though … the reality is what’s going on? Everyone is shifting to streaming. You’ve seen, obviously, [Comcast] jump in with Peacock.
