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.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

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.

Read the original article on Business Insider