Netflix reported its first-quarter earnings this week, showing that it added 9.33 million new subscribers globally, exceeding analyst expectations of only 2.7 million.
This brings the streaming giant’s total subscriber base to a whopping 269.60 million.
The strong subscriber growth is a positive sign for Netflix, indicating that the company is still attracting new customers in a competitive streaming market.
In a letter to shareholders, Netflix attributed this growth to the successful release of new content, including the fourth season of "Stranger Things" and the second season of "Bridgerton."
The company’s revenue also grew by 14.8% to $9.37 billion, again surpassing analyst expectations.
Why Netflix Shares Dropped After Earnings Report
Netflix shares plunged by 8% Friday, the biggest drop in nine months, even after the company reported a strong first quarter.
Many are speculating that this is due to its announcement that it will stop reporting quarterly subscriber numbers starting in 2025.
Netflix Co-CEO, President and Director Gregory Peters explained why in a question-and-answer segment after the report.
“We've evolved and we're going to continue to evolve, developing our revenue model and adding things like advertising and our extra member feature, things that aren't directly connected to a number of members,” Peters said.
This shift in focus to traditional financial metrics like sales and profit reflects Netflix's attempt to move beyond subscriber growth as the key measure of success.
Editor Emil Potalinski wrote a very simple yet logical explanation of Netflix’s move in a LinkedIn post.
“We have long expected our subscriber numbers to flatline, so we've been working on a plan to make more money from ads, games, live events, and more,” Potalinski wrote, with “we” pertaining to Netflix.
Couple this surprise announcement with a weak revenue forecast warning investors not to expect a high increase in the number of subscribers and revenue for the rest of 2024, and Netflix’s shares will drop drastically.