Investors shouldn’t over extrapolate based on Netflix’s disappointing quarter as the shift to streaming is set to continue, LightShed’s Greenfield says

Reed
Reed Hastings, Netflix’s CEO.

  • Netflix stock tumbled as much as 8% on Wednesday after posting disappointing earnings.
  • The streaming giant added just under 4 million subscribers in Q1 versus 15.8 million in the same quarter last year.
  • LightShed Partner’s Rich Greenfield says investors shouldn’t “over extrapolate” based on the poor results.
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Netflix’s disappointing first-quarter results have some investors heading for the exit, but experts say the global shift to streaming is just getting started and the streaming giant will continue to benefit.

LightShed Partner’s Rich Greenfield sat down for an interview with CNBC’s Andrew Sorkin on Wednesday to discuss Netflix’s latest earnings report and its potential effects on the streaming and subscription service ecosystem.

Greenfield said that investors are “over extrapolating” based on Netflix’s disappointing earnings report and that they should recognize the overall trend towards global streaming is still in full swing.

Netflix lost as much as $20 billion of its market cap on Wednesday after the company’s stock plummeted following its earnings release.

Netflix added fewer than 4 million subscribers in the first quarter of 2021, a big drop from the 15.8 million increase it saw a year ago, and more than 2 million less than the 6.25 million new subscribers analysts had anticipated.

The company also guided for just 1 million new subscribers in the upcoming quarter, compared to analysts estimates for 4.8 million.

While the headlines around Netflix’s quarterly results mainly focus on the less than stellar subscription figures, the company did post some positives in its first-quarter release.

The streaming giant revealed it pulled in a profit of $1.71 billion in the quarter compared to just $542.2 million from a year ago. Revenue rose to $7.16 billion from $6.64 billion last year as well.

Greenfield also noted that although Netflix is facing more competition from new streaming services, cord-cutting continues to accelerate.

The analyst said Verizon has dropped 7% of its video subscribers year-over-year and Comcast is talking about losing upwards of 2 million video subscribers in 2020.

He also highlighted the potential for growth in Netflix’s overseas offerings as a big catalyst in the coming years.

“In all of Asia-Pacific, Netflix has 27 million subscribers, it’s a market with hundreds of millions of potential subscribers over time,” Greenfield said.

“So, again, it’s very easy to get caught up in the negativity and being upset about Q1 numbers, the reality is there’s a long way to go and we’re still pretty early in the transition to streaming television,” he added.

Netflix added 1.4 million subscribers across Asia during the first quarter.

The company has been hitting on all cylinders creatively as well, its movies received 36 Oscar nominations this year alone.

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Netflix loses $20 billion in market value after subscriber growth falls short of forecasts

BRIDGERTON - Netflix
Netflix show “Bridgerton.”

  • Netflix shares fell by up to 8% on Wednesday, erasing $20 billion in market value.
  • The video-streaming service missed its subscriber-growth forecast and issued weak guidance.
  • Netflix plans to spend $17 billion on content this year to drive future growth.
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Netflix shares tumbled as much as 8% on Wednesday, wiping $20 billion off the video-streaming platform’s market capitalization. The selloff came after the company added fewer subscribers than expected last quarter, and warned of further weakness.

The media company grew its global paid memberships to 208 million, missing its forecast of 210 million. It added fewer than 4 million subscribers – less than half the 8.5 million it signed up in the preceding quarter, and a quarter of the almost 16 million it attracted in the first quarter of 2020.

Netflix also signaled its subscriber growth is yet to recover. It expects to add only 1 million memberships this quarter, down from 10 million in the second quarter of 2020.

The group’s bosses blamed the subscriber-growth shortfall on the pandemic, saying it pulled forward demand and delayed the release of new TV shows and movies on its platform. They dismissed the idea that Disney Plus – which has amassed over 100 million subscribers since it launched 16 months ago – was responsible.

“We had those 10 years where we’re growing smooth as silk and then just a little wobbly right now,” CEO Reed Hastings said on the earnings call.

Despite its challenges, Netflix grew revenue by 24% year-on-year to $7.2 billion last quarter, and scored a 140% increase in net income to $1.7 billion.

The company expects subscriber growth to rebound in the second half of this year, fueled by new seasons of “You,” “The Witcher,” and “Sex Education,” as well as blockbusters including “Don’t Look Up” and “Red Notice.” It also plans to spend $17 billion on content this year to ensure a steady flow of new releases going forward.

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Netflix’s Reed Hastings, Instagram’s Kevin Systrom, and others join billionaire investor Ray Dalio for massive charity giveaway

Ray Dalio
  • Top business executives and leaders are joining famed investor Ray Dalio to fund a massive charity giveaway coming sometime this week.
  • The leaders include Netflix CEO Reed Hastings, Instagram co-founder Kevin Systrom, media mogul and Thrive Global founder Arianna Huffington, and author and podcaster Jay Shetty.
  • Last week, Dalio gave away 10,000 “charity gift cards,” each worth $100, that anyone could claim and donate. They were all claimed within two hours.
  • Dalio said in a statement he wants to encourage people to rethink gifting, to donate more to charities in a time of economic need rather than purchase “useless material stuff.”
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Last week, Ray Dalio, investor and founder of the world’s largest hedge fund Bridgewater Associates, gave away 10,000 “charity gift cards” each worth $100. Anyone could claim a gift card and donate it to their charity of choice. 

All 10,000 gift cards were claimed within two hours, a sign of the massive need many nonprofits find themselves in due to the coronavirus pandemic’s economic downturn. 

Now, other leaders in the business community are joining Dalio in his effort to fund another round of giveaways. The list of leaders include Netflix CEO Reed Hastings, Instagram co-founder Kevin Systrom, media mogul and Thrive Global founder Arianna Huffington, and author and podcaster Jay Shetty. 

“I was so happy that so many people signed up, but felt terrible that others were closed out,” Dalio said in a social media post

The number of gift cards to be made available in this upcoming round has yet to be determined, per a spokesperson for Dalio. The new gift card launch is expected this week. 

For the famed investor, the initiative is a chance to rethink holiday gifting amid a time of dire need. Dalio has previously spoken about inequality in America, saying in an April interview that America’s jarring inequality is a “national emergency” that is threatening capitalism.

“Imagine the impact we could have if people started giving each other the ability to donate to their favorite charities rather than giving them useless material stuff,” Dalio said in a statement.

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