Stranger Things Season 4 FAILS to rescue Netflix despite being watched for ONE BILLION hours: Subscriber growth is ‘subdued’ as stocks languish 70% down on highs

  • Analysts say the recent release of Stranger Things 4 did not rescue Netflix
  • The company lost 200,000 subscribers in Q1 and expected to lose more in Q2
  • Its stock has declined by 70% despite a recent surge fueled by Stranger Things 4
  • Experts claim Netflix is a ‘business in transition’ and investors should monitor it 
  • Stranger Things hit No. 1 on Netflix’s Top 10 lists in 91 countries
  • Season 4 also pushed total viewership for the series to more than 1.15B hours 

Netflix stock is still down 70 percent despite the ‘short-term relief’ provided by the release of the final two episodes of Stranger Things season four.

The platform’s stock has been on the rise since Friday when an overwhelming influx of viewers pushed Netflix beyond its capacity and caused it to crash.

The latest season pushed total viewership for the series to more than 1.15 billion hours, making Stranger Things 4 the the second most-watched Netflix season ever. The show also hit No. 1 on the platform’s Top 10 lists in 91 countries.

However, analysts warn Netflix is still a ‘business in transition.’ The company is battling ‘subdued’ subscriber growth fueled by record-high inflation rates and stiff competition from Amazon, Apple and Disney+.

Netflix lost 200,000 subscribers at the end of Q1, shrinking the value of the company nearly 70 percent. It also announced it expects to lose another 2 million subscribers by the end of Q2. 

The platform also cut 300 staffers in late June, weeks after laying off off over 150 employees as it grappled with its weakened stock price. Netflix stock was worth over $600 a share in January, but as of Tuesday afternoon was trading at around $183.

Netflix stock is still down 40 percent despite the ‘short-term relief’ provided by the release of the final two episodes Stranger Things season four

Netflix stock was worth over $600 a share in January, but as of Tuesday afternoon was trading at around $183

Thomas Champion, director and senior research analyst at Piper Sandler, said Netflix is a company investors should monitor but not yet buy.

‘We continue to view NFLX as a business in transition,’ Champion said Tuesday in a statement to CNBC. ‘Subscriber growth slowed significantly and it’s possible Covid concealed an increasingly crowded streaming market.’

The analyst explained the recent release of Stranger Things, which crashed the platform for more than 13,000 users, shows reason for ‘optimism’ but doesn’t mean the streaming giant has recovered yet.

Stranger Things sets new Netflix viewing milestones 

The latest season of Netflix Inc’s ‘Stranger Things’ has pushed total viewership for the series to more than 1.15 billion hours, the streaming service said on Tuesday.

The science-fiction drama starring Winona Ryder and Millie Bobby Brown has become the most popular English-language series on Netflix. The only other Netflix show to cross 1 billion viewing hours is South Korean drama ‘Squid Game.’

‘Stranger Things’ also hit #1 on Netflix’s Top 10 lists in 91 countries, a first for an English-language TV series, the company said.

The show’s fourth season concluded with the final two episodes released last week, briefly crashing the Netflix app as fans rushed to view it. The series debuted in 2016.

‘Stranger Things 4 may provide short-term relief, but Top 10 hours are mixed. The ad-supported opportunity does give reason for optimism, but will take time,’ he said.

The show’s fourth installment had already set the set the record as the No. 1 English-language series on Netflix after the first seven episodes were released on May 27. 

Stranger Things 4 Volume 1 racked up 930.3 million hours of streaming viewership in its first 28 days on Netflix, breaking a record previously held by Bridgerton – another platform original series. 

Volume 2 pushed the show over the edge, making it the company’s second-most watched show behind last year’s Squid Game, which had 1.6 billion views in its first month.

The final two episodes pulled in 301 million viewership hours after their Friday release, bringing the total to 1.15 billion, Deadline reported. 

Stranger Things was the most watched show last week and ranked No. 1 on the Top 10 list in 91 countries. 

The series broke Netflix’s record for having the largest premiere weekend ever for an English-language show after clocking 286.79 million hours viewed.

Stranger Things 4 was also the most viewed season of an English-language show in a single week with 335.01 million hours viewed in the last seven days.

Additionally, it moved into No. 3 on the platform’s Most Popular TV in just 10 days after its premiere. 

Champion argues that despite the success of Stranger Things 4, Netflix user growth remains ‘subdued.’

Streaming of Netflix’s ‘Top 10′ shows has declined four percent quarter over quarter, he noted, seemingly implying Stranger Things’ success is not enough to suggest overall recovery for the company.

The investment firm also pointed out how implementing an ad-supported tier could be a more than $1 billion quarterly revenue opportunity for the company and questioned if Netflix’s ‘management is being more reactive than proactive here.’

Analysts warn the recent release of Stranger Things, which crashed the platform for more than 13,000 users, shows reason for ‘optimism’ but doesn’t mean the streaming giant has recovered

While Netflix was ahead of the streaming pack for years, its newfound losses can be attributed to other big companies shifting weight behind their streaming services, including Disney+, Paramount+, HBO Max and Peacock. 

Those services have offered high-budget content that has loosened Netflix’s stranglehold over streaming consumers. 

Much of the content that was previously on Netflix has been taken back by their home companies, furthering the decline in quality of Netflix’s library. 

The U.S. media sector and economy as a whole have been weakened by recent recession fears and plunged major companies stocks into bear territory.

Data shows that many American consumers started changing their spending habits after the inflation rate hit a 41-year-high. 

Many said they have cut back on large-scale purchases and reduce their spending of subscriptions and routine services. 

Seemingly impacted by the decrease in consumer spending, Netflix lost 200,000 subscribers at the end of Q1. 

Netflix lost 200,000 subscribers at the end of Q1, shrinking the value of the company nearly 70%. It also announced it expects to lose another 2 million subscribers by the end of Q2

The loss marked the first time the streaming giant’s numbers had fallen in a decade, harshly denting their hopes of adding 2.5 million subscribers. 

It also led investors to file a class-action lawsuit, claiming they were misled about subscriber growth.  

The lawsuit seeks ‘compensatory damages’ from Netflix after they failed to hit their subscriber estimates, and broke securities laws in the process. 

The complaint says Netflix made ‘materially false and/or misleading statements’ because it ‘failed to disclose material adverse facts about the company’s business, operations and prospects.’

Many believe an obvious solution to some of Netflix’s recent issues would be an adoption of an advertising model to increase revenue, but co-CEO Ted Sarandos has dismissed the idea.

‘For us, it was all about simplicity of one product, one price point,’ Sarandos told the New York Times in May, adding: ‘I think it can now withstand some complexity.’

‘We make decisions based on the best information we have at the time. They are not always going to be right, but how you help navigate the outcomes, and the urgency you bring to it, is what gets folks through the storm. And the storms will come.’

Sarandos called the loss of subscribers ‘disappointing and embarrassing,’ but implied the company needs to look ahead and move on from the failures.

‘How much time do you spend licking your wounds?’ he said. ‘Let’s have that burned into our memory, but we’ve got to move on and move fast.’

In another attempt to reduce costs, Netflix axed 300 staff last month after having already cut employees multiple times this year.

The firm employs 11,000 staffers globally, and the cuts were made across multiple areas of the company as executives try to cut costs wherever they can. 

‘While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,’ a Netflix spokesperson told Variety on June 23.

‘We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition.’

Source: Read Full Article