20 July 2022
If you are covering Netflix’s latest results, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“Netflix will be relieved with its Q2 numbers as they are less bad than they certainly could have been. Subscriber numbers were down ‘only’ 1m which given 2m was predicted could be seen as a good result. Guidance remains challenged, however, and the slowdown for Netflix remains real as competition increases and macroeconomic factors take effect.
“Netflix wants to return to growth and there are four key areas that can propel it towards this objective. It is trialling options to tackle password sharing while advertising supported services will be in operation at the beginning of 2023. It could also look towards gaming and sports content as areas of growth, however, these are not guaranteed or necessarily something Netflix could pursue.
“Despite currency headwinds, margins remained strong. Given Netflix’s challenges year to date this is a positive factor for the stock and we should see margins grow as revenue accelerates. Ultimately Netflix remains an important business in the post-Covid age, and despite subscriber slowdown the case for the company remains positive. The market has discounted the stock by too much, in my opinion, particularly given the business remains the market leader in TV and movie streaming services.”
