Zhitong Financial APP learned that streaming stocks fluctuated violently after trading on Tuesday Eastern time. Netflix Inc's latest earnings report revealed that the number of users fell for the first time in more than a decade, heightening concerns about companies with similar businesses, and streaming concept stocks tumbled across the board after trading. The current market concern is that a reopened economy will get these companies into trouble.
In after-hours trading, Roku (ROKU.US) fell more than 7%, Walt Disney Company (DIS.US) fell nearly 6%, Fubo TV (FUBO.US) fell more than 5%, and streaming giant Nai Frisbee fell more than 25%.
After Netflix Inc announced the latest financial results, the share prices of streaming peers weakened across the board in after-hours trading.
In Netflix Inc's latest earnings report, the company expects the number of users to fall by 2 million in the current quarter, which could prompt analysts to rethink their expectations for the entire streaming industry. Shares of other film and television or media companies such as Warner Bros. Discovery Inc (WBD.US), Paramount Universal (PARA.US) and Spotify Technology (SPOT.US) also fell to some extent in after-hours trading.
Adam Crisafulli, founder of Vital Knowledge, said in a report that while Netflix's worse-than-expected results would endanger all technology companies and possibly even market sentiment, he personally believed that the disadvantage was limited to the company and the streaming industry as a whole.
The dividend of "house economy" is exhausted?
With the dividend with the "home economy" as the core brought by COVID-19 's epidemic gradually withdrew, and the competition in the streaming media industry is becoming more and more fierce, high inflation and fever in Europe and the United States are difficult to retreat, and the number of Netflix Inc subscribers is difficult to return to the past glory. Netflix Inc's share price plummeted after reaching an all-time high in November last year. Shares of FuboTV, a streaming upstart that went public in October 2020, have plummeted by more than 88 per cent since its all-time high in December 2020.
Walt Disney Company, another big streaming giant, owns the three major streaming businesses: Disney+, Hulu and ESPN+, and its share price also changes with the number of user registrations and long-term forecasts. Now, the industry leader says the number of users may be about to enter a period of stagnation, especially in the US market. Netflix Inc also reported that the number of users in the US market declined to a considerable extent in the first quarter.
Netflix Inc's shares, which performed poorly in 2022, were down more than 42 per cent by Tuesday's close. The decline far outweighed the decline of about 13 per cent on the Nasdaq 100th index, where Netflix Inc was the third worst performer this year among the tech-heavy index.
Much of the decline in the company's share price this year stems from the quarterly financial report released in January, which disappointed the market with forecasts for subscribers, when Netflix Inc expected the number of subscribers to increase by 2.5 million, well below market expectations of an increase of 6.26 million. In the current financial report, Netflix Inc expects the number of Q2 paid households to decrease by 2 million, while analysts expect it to increase by 2.4 million, so Netflix Inc's share price may not have bottomed out yet.
Data from Bloomberg dating back to 2011 show that if Netflix Inc's share price continues to close lower on Wednesday, it will mark the company's fifth consecutive quarter of earnings showing a negative effect on the stock price. It will be the longest on record.