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Netflix Shares Fall After Clients Growth Slows

Netflix shares plunge 20% after subscriber growth slows and spreads weak expectations

Netflix announced the results of its fourth quarter, which showed that the profits of the entertainment broadcasting company exceeded analysts’ expectations, and revenues came in line with expectations, but the company’s stock plunged more than 20% during extended trading to its lowest level since June 2020 due to the slowdown in the growth of subscriber numbers.

Netflix earned $1.33 per share, beating Wall Street analysts’ estimates of 82 cents, and the company raised $7.71 billion in revenue, in line with expectations. Although it beat expectations for new subscriber numbers, which added 8.28 million net paid subscribers during the fourth quarter, compared to expectations of 8.19 million, but this represents a slowdown compared to the third quarter results.

Netflix expects that it will add 2.5 million new subscribers during the current first quarter of 2022, which is much lower than the number of subscribers that the company added during the first quarter of 2021, knowing that analysts’ expectations for this quarter, which amount to 6.93 million new subscribers, are far from the company’s expectations.

Netflix has justified its slowdown in results by citing increased competition as one of the reasons, but it has previously stated that companies such as Apple and Disney will not materially affect the growth of its business.

The company announced a price hike in both the United States and Canada last week as part of its strategy to exploit customer engagement with Netflix’s exclusive content, and it is worth noting that Netflix announced yesterday its entry into the video game market. Read more [Netflix and Microsoft Enter The Gaming Industry] and [Netflix Raises Subscription Prices in Two Countries].

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