Will Netflix continue to lose subscribers this year? Investors look forward to guidance

Netflix investors are already know how to expect bad news When the company reports its second quarter results on Tuesday. Now they’ll be looking for guidance on what to expect for the second half of the year.

Streaming service executives warned in April that subscriber losses could be close to 2 million during the second quarter, After a drop of 200,000 during the first quarter. At the time, Netflix attributed the drop in subscribers to factors including intense competition, password sharing, and inflation.

When Netflix reports after the bell on Tuesday, another forecast of subscriber losses for the third and fourth quarters could boost the company’s stock.

Ahead of earnings, analysts expect an average of 1.8 million net new customers to be added during the third quarter, according to the Street Account. The company declined to provide full-year guidance last quarter, but did note that it has a strong slate of content releases in the back half of 2022. It also said the hike in prices, due to which some customers may have to leave earlier this year. Have less than a churn factor.

The company has approximately 222 million customers globally.

As of the second quarter, analysts are divided as to whether the loss of subscribers will be better or worse than Netflix predicted. Some expect the company to lose more than 4 million customers, while others will lose 1.5 million.

“I think 2 million are conservatives,” said Wedbush analyst Michael Pachter. “I know they try to be conservative, and generally don’t remember much, so if it’s worse, I’d be surprised.”

Pachter and other analysts, who expect smaller subscriber losses, have pointed to the streaming service’s popular series “Stranger Things.” The show’s fourth season was released in two parts, one at the end of the second quarter and one at the beginning of the third. Some analysts expect the division to limit churn or spur new customers to sign-up or return.

“As soon as Netflix can show to Wall Street, they’ve been releasing new content in several quarters, just like they did with ‘Stranger Things’ Season 4, and the efforts they’re making to reduce churn have been shown to be a good one.” Unraveling, we will likely see more interest from investors given the potential for .Net for new customers,” said Dan Rayburn, a media and streaming analyst.

A cheap ad-supported subscription plan is also in the works and may bring back lapsed customers or encourage new sign-ups. No date has been set for the option’s roll-out, but more information on its development on Tuesday could improve investor confidence in the company. Netflix’s standard plan costs $15.49 per month in the US, making it more valuable than most other major streaming services.

Netflix has a lot of titles coming out before the end of the year to attract subscribers. In the third quarter, customers will have access to the big-budget action movie “The Gray Man”, the first season of “Sandman”, Jamie Foxx’s vampire flick “Day Shift” as well as a comedy called “Me Time”. Mark Wahlberg and Kevin Hart.

Also featured are a fifth season of “Cobra Kai”, several romantic comedies, and a handful of children’s titles including “My Little Pony: Make Your Mark” and Roald Dahl’s “Matilda: The Musical”.

“I expect they will guide to profit in Q3,” Pachter said. “The consensus for Q3 is 1.81 million new clients, despite the fact that half of analysts downgraded the stock. Most are hedging their bets, and I see that a guide to return in client growth positively. will receive.