Netflix Q2 Earnings Report: Lost 2M Subscribers?

Netflix, the N of the so-called FAANG darlings and the virtual space where everyone huddled for content during the 2020 lockdowns, is having a terrible year.

  Netflix in Trouble

2022 is a bad year for the stock market but a nightmare for Netflix:
-> Stock Price Down: 70%
-> Hundreds of Employees Fired
-> Expect to lost 2M Subscriber
-> Year-over-year decline of 20%

  Netflix Q2 Report

Due to a combination of price increases, more competition, and password sharing, Netflix lost 200K subscribers in the previous quarter and warned that it expects to have lost another 2 million.

  Losing 2M Subscribers

With earnings of $3 per share and total revenues expected to rise 9.7% annually to $8.053 billion, Netflix predicts a year-over-year fall of 20%.

 20% Year-over-year Fall

This is the third time in the past twenty years that Netflix has seen a decline of more than 70%. The initial one happened in 2004, the second one in 2008, and the current one.

  Stock Price Fall 70%

In the streaming market, Netflix has been up against tough competition from companies including Disney+ by Disney DIS, HBO Max, Comcast's CMCSA Peacock, Paramount+, and Apple TV+ by Apple AAPL.

  Killer Competition

In contrast to management's estimate, the Zacks (Equity Research) Current Estimate for paid memberships at the conclusion of the term is 224.23 million.

  224M Total Subscribers

Netflix is cooperating with Microsoft (MSFT) - Get Microsoft Corporation Report on an ad-supported version of its service that will be "more integrated and less interruption" than traditional TV.

  What is the Solution?

More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We're excited to work with Microsoft as we bring this new service to life."

  What Netflix Said?

Netflix also said it expects to be free-cash flow positive for the 2022 year and beyond, with first quarter free cash flow rising 15.9% to $802 million.

  Free Cash Flow

The so-called "cost per thousand," or CPM, is what Netflix will be able to charge advertisers for the cost of a thousand ad impressions. Expert speculates that this cost may be as high as $60.

  Revenue From Ad Model

From a user standpoint, If Netflix can't raise the quality of its content, it will be in big trouble in long term, because the subscriber was getting better content from competitors at a cheaper prices.

  Long-Term Effect

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