NFLX Stock: How Did Netflix Perform In Q4 of 2022?
23 Gennaio 2023 - 10:56AM
Netflix (NASDAQ: NFLX)
announced its quarterly results for Q4 of 2022 yesterday and
reported revenue of $7.85 billion and adjusted earnings of $0.12
per share. It also added 7.66 million subscribers in
Comparatively, Wall Street
forecast the streaming
giant to report revenue of $7.85 billion and earnings of $0.45 per
share in the quarter.
While Netflix met revenue
estimates, it missed earnings consensus by a wide margin. But NFLX
stock is up over 7% in pre-market trading as it blew past Wall
Street’s subscriber estimates. The company added 7.66 million
subscribers in the quarter, much higher than forecasts of 4.57
million subscriber additons.
During the earnings call, Netflix
also disclosed that co-CEO Reed Hastings would step down from his
position, transitioning to the role of an executive
What impacted NetflixU+02019s earnings in Q4 of
Netflix attributed its earnings
miss to a loss tied to euro-denominated debt. However, its margins
of 7% surpassed analyst estimates. The December quarter was the
first time that Netflix included details of its ad-supported
service in its financials. This tier was launched in November, and
the company has not disclosed how many subscribers are from users
who opted for the lower-priced service.
Netflix claimed user engagement
from the ad-supported tier was similar to other regular plans. It
also confirmed that there has not been a massive shift in the
number of people switching to ad-supported plans.
Netflix CFO Spencer Neumann
stated, “We wouldn’t be getting into this business if it couldn’t
be a meaningful portion of our business. We’re over $30 billion in
revenue, almost $32 billion in revenue, in 2022 and we wouldn’t get
into a business like this if we didn’t believe it could be bigger
than at least 10% of our revenue.”
Netflix remains optimistic about
its shift to an ad-supported business model. But the company will
no longer offer subscriber guidance in future earnings reports as
it remains focused on expanding revenue which will now be Netflix’s
north star metric instead of membership growth.
Netflix explained, “2022 was a
tough year, with a bumpy start but a brighter finish. We believe we
have a clear path to reaccelerate our revenue growth: continuing to
improve all aspects of Netflix, launching paid sharing and building
our ads offering. As always, our north stars remain pleasing our
members and building even greater profitability over
What next for NFLX stock and investors?
Netflix continues to spend
billions of dollars each year to create proprietary content and
expand its subscriber base across geographies. It now expects
revenue in Q1 of 2023 to increase by 4% year over year, compared to
the 3.7% top-line forecast by Wall Street. Netflix expects revenue
growth will be driven by an increase in paid memberships and more
money per paid membership.
The upcoming quarter ending in
March will also be the first where Netflix will roll out its paid
sharing program. Here, it might be able to increase sales from
users who previously shared passwords with those outside their
The streaming heavyweight also
said it expects a portion of its users who borrow passwords to stop
watching content on its platform as they are not added as extra
members to existing accounts.
Valued at a market cap of $140
billion, Netflix stock is down 54% from all-time highs. After
increasing sales by 6.5% year over year in 2022, analysts expect
the top line to expand by 7.3% to $33.9 billion in 2023. However,
its earnings are likely to narrow from $11.2 per share in 2021 to
$10.4 per share in 2023.
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