Netflix shares crash as subscriptions fall

[MongiIG]

After reporting a first drop in subscribers in a decade, Netflix shares lost almost 25% in extended trade. The company is now looking at ways to stop subscription sharing.

 

 

 Jeremy Naylor | Writer, London | Publication date: Wednesday 20 April 2022 11:58

 

Netflix earnings review

In extended trade last night, Netflix saw its shares tumble by a quarter of its entire value.

Almost 25% was wiped off the share price in extended trade on the IG platform last night as a result of earnings coming through for the latest quarter, disappointing by a fair margin and subscribers down as well for the first time in ten years.

The streaming giant lost 200 000 subscribers in the first three months of the year. That's the first in a decade, falling short of its forecast of adding 2.5 million more new people to its subscription list.

The group partly explained this performance by the suspension of its service in Russia, resulting in the loss of around about 700 000 members of its role in the Russian economy. The group reported earnings per share (EPS) of $3.53 on revenues of $7.87 billion.

The group also warned that it will address the password sharing issue and wants households sharing passwords to start paying individually. Netflix estimates more than 30 million US and Canadian households are using a shared password to access its content - 100 million households worldwide.

You've only got to look at the share price to realise what happened. You can see quite clearly the effect of all this last night.

Netflix - technical analysis

This is an extended trade, so it isn't represented by the normal chart. It will start on the back foot when things get underway later on in the cash session. It has opened on extended trade on this Wednesday morning.

You can see a very small green candle but, broadly speaking, it is holding onto much of the gains that it lost last night. Just going back, you can see quite clearly this is a level not seen here since the 26th of September 2019.

Let's remind ourselves as to what happened during the Covid lockdowns, the Covid lows represented by the bottom of this blue box down here at $290.39. The stock then went on to make 141% upside, taking us all the way up to over $700 a share. And then, since that high point back on the 18th of November last year, we've seen a really big reduction in value and that 52% was as at the close last night.

If you extend that down you can see the total value lost in the company since that period, since the record high, which has been a whopping 63%. So, we're expecting a big drop at the start today for Netflix on the cash session.