Netflix, Subscriber Count Surges to 9.33 Million... Yet OTC Shares Fall Over 4%

The first-quarter earnings of Netflix, the world's largest video streaming service (OTT) company, far exceeded Wall Street expectations due to the effects of cracking down on password sharing and introducing an ad-supported plan. However, future outlooks fell short of expectations, and the current stock price is showing a decline of over 4% in after-hours trading.

[Image source=AP Yonhap News]

On the 18th (local time), Netflix announced after the market closed that its first-quarter subscriber count reached 269.6 million, an increase of 9.33 million compared to the previous year. This growth far exceeded Wall Street's forecast range of 4.8 to 5.1 million. During the same period, revenue was $9.37 billion, and net income was $2.33 billion. These figures also surpassed Wall Street estimates ($9.28 billion and $1.98 billion, respectively). Earnings per share (EPS) stood at $5.28, and the operating margin rose more than 7 percentage points year-over-year to 28.1%. The company emphasized this as a "smooth start to 2024."

However, Netflix projected in its earnings announcement that due to seasonal factors, the increase in paid subscribers in the second quarter would slow compared to the first quarter. The second-quarter revenue forecast of $9.49 billion also fell short of Wall Street expectations ($9.51 billion). This represents a weaker performance guidance compared to the strong first-quarter results.

Additionally, Netflix declared its intention not to disclose quarterly subscriber numbers and average revenue per member (ARM) starting from the first quarter of 2025. The company stated, "In the early days when revenue and profits were minimal, subscriber growth was a strong indicator of future potential, but now we generate significant revenue and free cash flow," adding, "We want investors to evaluate the company by the same standards as management." Going forward, instead of subscriber numbers, the company plans to focus on key financial metrics such as revenue, operating margin, free cash flow, and Netflix viewing hours.

The market is showing disappointment over the weak outlook. On the New York Stock Exchange today, Netflix's stock price closed slightly down during regular trading and is currently down nearly 5% in after-hours trading. The stock, which briefly surged immediately after the better-than-expected first-quarter earnings announcement, turned downward as detailed information was released.