Netflix Reports Mixed Q1 Results, Misses Subscriber Estimates

While Netflix's earnings per share (EPS) of $2.88 beat analysts' expectations of $2.86, the company fell short on subscriber growth and revenue expectations, with 1.75 million net additions versus the expected 2.3 million, and revenue of $8.16 billion versus $8.18 billion expected.

Their shares initially dropped by as much as 12% following the report, but later pared losses as investors digested the news.

However, the company's projections for Q2 2023 were disappointing, with earnings per share of $2.84 on $8.24 billion in revenue, below Wall Street forecasts for earnings of $3.05 per share on $8.5 billion in revenue.

Investors are also eagerly waiting on updates for Netflix’s recently-launched ad-supported tier, which comes at a cost of $6.99 per month in the US and serves as a complement to Netflix’s existing ad-free tiers. The company reported that engagement on the ads tier is above its initial expectations, and that it's upgrading the ads experience with more streams and improved video quality to attract a broader range of consumers.

Their controversial crackdown on password sharing, has also broadened to countries like Canada, New Zealand, Portugal and Spain - and raised concerns about the near-term churn in Latin America markets.

While the Q1 report showed mixed results, the company’s ad-supported tier has shown promising engagement levels. But their slower subscriber growth and disappointing Q2 projections certainly raised questions about the company’s growth prospects.

Source: CNBC