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NFLX stock forecast 2025: plummeted 22% after the earnings report.

 

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Time to talk about Netflix, which plummeted 22% after the earnings report.


First of all, Netflix's financial report this time does have its thunderous place, but part of the reason for the 22% drop in one breath is because the market sentiment has been very bad recently. At this time, the financial report thunderous will be punished more than usual. It is a wake-up call for companies that are about to report financial reports in the future, so we try to hold the stocks in the hands of companies with relatively stable historical financial reports and try to balance our positions as much as possible, to reduce the risk of financial report storms. After all, this quarter In a more dangerous period, back to the point.


Let's take a look at Netflix's financial report this time. In the fourth quarter of 2021, Netflix's EPS was $1.33, exceeding analysts' estimates of $0.82, and revenue was just in line with expectations, with $7.71 billion, an increase of 16% year-on-year. %, 0.03% higher than analysts' expectations, and the global net member number increased by 8.28 million, exceeding the expected 8.19 million, so on the surface, the performance of the fourth quarter of 2021 is not bad, in line with expected.


If so, why did it plummet after the market? In fact, the problem lies in the membership growth guidance. Yes, this time the membership growth guidance that Wall Street cares about most has gone wrong again, that is, the membership growth guidance is too far from analysts' expectations. The first quarter of 2022 Net member growth is expected to be 2.5 million, which is a year-on-year decrease of 37.2% and a month-on-month decrease of 69.8%. Most importantly, this is significantly lower than the analyst's previous estimate of 6.93 million. The rate is 63.9%, so it is obvious that the membership growth guidance given by Netflix this time is far from the analysts' expectations, which means that the previous management and the market communicated incorrectly, causing the market to mistake Netflix for this year. The growth of members of the company can continue, but the actual situation is far from the imagination.


Therefore, after the financial report came out, the stock price was naturally severely punished. After all, the membership growth guidance of 63.9% lower than expected is not a small amount. In fact, this time Netflix's financial report is thunderous, and the management's responsibility is still quite large because Netflix has said before. Apple and Disney will not affect their growth, but this week's earnings report said that the first quarter of this year's membership growth guidance fell short of expectations because the competition was too fierce, and too many companies launched their own streaming services. Fei's growth was negatively impacted by competition.


Netflix basically denied the stories it told the market before, which directly made the market start to worry about Netflix's future growth story, and it was one of the reasons for this crash. Of course, we also knew for a long time that Netflix was The competition in the industry is fierce, but when the words come from the management's own mouth, the nature and the market's interpretation are very different, especially when the company's management denied the expectations that they had given before, but to To make up for the lack of membership growth, Netflix continued to increase the price of membership fees. Last week, Netflix continued to increase the basic package to $9.99 a month, the standard package from the previous $13.99 to the current $15.99 a month, and the advanced package from $15.99. The previous $17.99 has been increased to the current $19.99 a month. After the monthly fee increases, the income brought by each member will increase, so that even if the membership growth slows down, the revenue and EPS growth will continue. However, this year First-quarter revenue and margin guidance were still below analysts' expectations, and Netflix's membership growth remains the market's top priority.


This has always been the case in the past, so only when membership growth exceeds expectations or recovers in the future, will Wall Street continue to pay the bill, but the difficulty is that the competition in the streaming media industry is very intense, and any company wants to come in, so no It’s just Netflix, other competitors like Disney+ are also struggling. This industry can feel the pressure of competition more than others. It feels that there is not enough meat for everyone to eat, and this industry is more about film and television works. Instead of technology, the growth of Netflix members may not be very stable in the future, unless they can continue to launch blockbuster works, the main reason I personally did not invest in Netflix is ​​that the industry is too competitive.


Streaming media companies rely too much on the performance of their works. Unlike technology companies, which have a technical moat, Netflix basically relies on IP or good works to maintain its development, but for me, this content industry is not. It's too stable, because if Netflix can't produce good works in a quarter in the future, then their membership growth and income will be greatly affected, and Netflix's membership growth has always been unstable, their guidelines for membership growth It’s not just one or two times that it’s lower than expected. Every time Netflix’s earnings report has a problem with membership growth, the stock price will plummet, so I have never dared to invest in Netflix.


Also, my personal style still prefers companies with technological moats. Investing in companies with hard-core technology will make me feel more at ease and make it easier for me to fall asleep. Of course, the above is just my Personal point of view, everyone should follow their own investment philosophy and style. If you are interested in Netflix, I don’t think you need to rush to pick up the flying knife in the short term, because the entire stock market is not very friendly to technology stocks now. Technology giants Recently, it has begun to be unbearable. The market is still afraid of raising interest rates, shrinking the balance sheet, and inflation, and Netflix has also fallen below the big support of $460 in the past year and a half. It is very difficult to recover in the short term, so I don't think it is necessary to rush to increase Netflix. For the time being, we can observe it for a while. Anyway, its momentum will not be very strong in the short term, and the rebound may not be very high. Moreover, Netflix's current stock price also contains a lot of panics. When the panic is relatively large, the support may not really be able to hold, let alone Netflix, even the support of the broader market may not be It's very reliable, but if you have to say a price, you may be able to carry it at the two prices of $335 and $251.

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