Netflix adds much lower than expected net new paid subscribers in Q1

Netflix Inc. (NASDAQ: NFLX) said on Tuesday it concluded the fiscal first quarter with 3.98 million net new paid subscribers – a sharp decline from 8.5 million it had added in the prior quarter. In its guidance earlier this year, the American content platform had forecast 6 million net new paid subscribers for Q1.

Netflix shares were reported more than 10% down in extended trading on Tuesday. Including the price action, the stock is now exchanging hands at £360 per share versus a year-to-date high of 421 per share in late January. In comparison, Netflix had started the year 2021 at a per-share price of £375.

Netflix forecasts only 1 million net new paid subscribers for Q2

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In the comparable quarter of last year, Netflix had reported a record 15.77 million net new paid subscribers. The production company warned of a further decline to 1 million new customers only in the fiscal second quarter, which would mean lowest quarterly additions on record. Experts had forecast a much higher 6.34 million new streamers for Netflix in the recent quarter.

Netflix reported £1.22 billion of net earnings in the first quarter that translates to £2.69 per share to beat the FactSet consensus of £2.14 per share. The Los Gatos-headquartered firm attributed higher earnings to increased subscription prices.

The Nasdaq-listed company generated £5.14 billion of revenue in Q1 that represents a 24.2% annualised growth. According to FactSet, experts had called for a slightly lower £5.12 billion of quarterly revenue.

In separate news from the United States, the da Vinci Surgical System maker, Intuitive Surgical, also posted market-beating quarterly results on Tuesday.

Netflix to repurchase £3.59 billion of shares starting later this year

Netflix authorised share repurchases worth £3.59 billion to Tuesday. The buyback, it added, will begin later this year. The last time Netflix repurchased stock was almost ten years ago. Churn rate, as per co-CEO Reed Hastings, posted a decline in the first quarter.

The streaming giant expressed plans of spending over £12.20 billion on content (cash) in 2021. Paid membership growth, Netflix said on Tuesday, will catch up the pace again in H2 of the ongoing year as it releases new seasons of several popular TV shows.

Netflix performed largely upbeat in the stock market last year with an annual gain of close to 65%. At the time of writing, it is valued at £174.66 billion and has a price to earnings ratio of 93.34.