By Dhirendra Tripathi
Investing.com – Netflix stock (NASDAQ:NFLX) lost more than a fifth of its value in Friday’s premarket as new market realities hit the streaming giant in the fourth quarter.
The company is projecting it will add 2.5 million users by March, substantially lower than the 4 million it added in the first quarter of 2021. It closed December at nearly 222 million users.
The muted outlook came after the company added 8.3 million subscribers in the quarter through December, short of its aim of 8.5 million.
The company faces increasing headwinds after nearly two years of scorching growth fueled by the pandemic when home-stuck people turned to streaming content for entertainment. As more people return to work, Netflix faces the task of retaining subscribers while attracting new ones.
Competition too -- Disney+ (NYSE:DIS)+, Discovery (NASDAQ:DISCA), Sony (NYSE:SONY) and local players in international markets -- has been knocking on its doors. Netflix has reacted by cutting prices in growth markets like India and spending heavily on content and technology. As a result, its operating margin for the quarter eroded to 8.2% from 14.4% a year earlier.
Last week, it hiked prices in U.S. and Canada, its most mature markets where it still sees “tremendous room for growth”.
Netflix said its subscriber growth rates have “not yet reaccelerated to pre-Covid levels,” blaming “ongoing Covid overhang” and economic hardship in several countries.
The muted past and projected subscriber numbers come even some of the content – Squid Game, The Witcher and You to name a few -- drew in large audience. One of its biggest hits, Bridgerton returns this quarter.
Fourth-quarter revenue touched $7.71 billion, in line with estimates. Profit per share was $1.33, nearly 12% higher year-on-year.