Netflix Reveals a Concerning Update for Subscribers

Netflix did not meet its projected goal new subscribers in quarter one 2021, leaving investors and fans of the streaming service’s original content very concerned. According to a report by Yahoo Finance, Netflix reported 3.98 million new subscribers in Q1 — well below its 6.29 million goal. However, it isn’t all doom and gloom for the company, with other aspects potentially making up for the loss.

Netflix’s Q1 earnings report to stockholders was a mixed bag, with revenue and earnings both up while subscribers were down. The company made $7.16 billion in revenue, which was a slight step up from its $7.14 billion goals. It also boasted earnings of $3.75 per share, well above its $2.98 expectation. Still, the drastic miss on subscribership left many investors unsettled. After the report was published, shares sank about 10 percent before the end of that day.

The ominous report might be the end of an easy ride for Netflix, which is one of the companies that has generally benefitted from the quarantine aspect of the coronavirus pandemic. Investors reportedly call it the “stay-at-home” trade, since services like Netflix and other home-based products and services have seen a huge boost in the last year or so. Now that COVID-19 vaccinations are being distributed widely, these companies may have difficulty in keeping that momentum up.

To put things in perspective, Netflix added a record 15.8 million new users in the first quarter of 2020, when people everywhere were just beginning to stay home and avoid the virus. Even the company’s stated goal of 6.29 million new subscribers was a far cry from its best, yet it turned out to be unattainable.

“We believe paid membership growth slowed due to the big COVID-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to COVID-19 production delays,” read Netflix’s letter to investors with this report. “We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup. In the short-term, there is some uncertainty from Covid-19; in the long-term, the rise of streaming to replace linear TV around the world is the clear trend in entertainment.”

The company has set a conservative goal of 1 million new subscribers for Q2, though other speculators are hoping for more. Meanwhile, Netflix is up against more competition than ever with newer streaming services picking upstream and more prepping for launch.