Netflix loses 970,000 subscribers

Ads and new fees are key to recovery

Netflix yesterday reported a loss of 970,000 paid streaming subscribers in its Q2 earnings after having lost 200,000 customers in the first quarter of 2022. The company’s worldwide paid memberships decreased from 221.64 million to 220.67 million in Q2, and revenue growth has slowed dramatically.

It’s the first time in Netflix’s history that the company reported consecutive quarters of subscriber losses, The Wall Street Journal wrote. But the result was better than forecasted, as Netflix had told investors to expect a second-quarter loss of 2 million subscribers.

Netflix co-CEO Reed Hastings said in a call with analysts yesterday that “losing 1 million and calling it a success” is “tough,” but he added that Netflix is “set up very well for the next year,” according to a Seeking Alpha transcript. The newest season of Stranger Things apparently helped prevent larger subscriber losses.

Netflix’s latest forecast is that it will add 1 million paid subscribers in Q3, bringing the total up to 221.67 million. Paid subscribers hit a peak of 221.84 million in Q4 2021 after 15 years of consistent growth following the company’s transition from DVDs to online streaming.

Netflix Loses 200,000 Subscribers in Q1

Increased competition and password-sharing

Netflix lost 200,000 subscribers in Q1 and expects to lose another 2 million in the current second quarter, the streamer said in its first-quarter 2022 earnings release Tuesday.

In January, Netflix reported it had 221.84 million subscribers at the end of 2021. During the three-month period that ended March 31, a time span that included the debuts of “Bridgerton” Season 2 and “The Adam Project,”  Netflix says its total fell to 221.64 million subs.

The streaming service previously forecast 2.5 million paid net adds in Q1, while Wall Street analysts expected Netflix to add 2.8 million new subscribers worldwide in the first quarter vs. 3.98 million in the year-earlier period, according to FactSet. So the expectation it would perform poorly compared to previous quarters was a given — the fact it actually lost subs is quite shocking. Netflix cites both increased competition and password-sharing, which the streamer is looking to monetize, as drivers of this subscriber loss.

U.K. Wage Growth Hits a Record

Vacancies Pass 1 Million

U.K. wage growth hit a record as companies posted more than 1 million new job vacancies for the first time in an unprecedented scramble for staff following the loosening of lockdown rules.

Average earnings in the three months through June surged a record 8.8% from a year earlier, the Office for National Statistics said Tuesday. While the figure partly reflects distortions created by the pandemic, underlying wage pressures are also gathering pace.

The pickup underscores the scale of the recovery from the deepest economic slump in 300 years. Although the Bank of England expects strains in the labor market to prove temporary, policy makers warned this month that meeting the 2% inflation target will require a modest withdrawal of monetary stimulus.

S&P 500 Hits Record High And Dow Climbs 200 Points

Blowout Earnings And Economic Data

Ending a choppy session that initially pulled markets into negative territory, the S&P 500 closed at a new record high Tuesday after monthly economic data alleviated concerns over rising inflation while a string of strong corporate earnings fueled optimism over the economic recovery.

The S&P 500 ticked up 36 points, or 0.8%, on Tuesday to close at 4,423 points, beating out its last record close on July 26 and pushing gains this year to nearly 20%.

Meanwhile, the Dow Jones Industrial Average and tech-heavy Nasdaq, which are both up about 16% this year, climbed 0.8% and 0.6% to 35,117 and 14,761 points, respectively, ending the day within 1% of their latest highs last month.