Streaming service: Netflix does not convince the stock market

Netflix did not fully convince in the presentation of its business results. As the streaming service reported on Tuesday after the stock market close, its revenue growth slowed in the third quarter. In addition, the company has revised its sales forecast for its still young advertising business this year downwards. The stock market was unhappy. The share price fell temporarily in post-trade trading by more than five percent. The stock has lost more than 40 percent in value over the past twelve months. Business figures come amid troubled times for Netflix. In recent days, the company has caused a sensation with a series of announcements that give the impression that it is under considerable pressure to act. First, it was announced that it wants to separate from 1000 employees and thus six percent of its workforce. This is his first major staff reduction since 2022, when his subscriber numbers shrank for the first time in a long time. Then there were several changes in top management: Bela Bajaria was abruptly replaced as Chief Content Officer, she was responsible for all content on Netflix in this role. Dan Lin, who previously led the film business, is also leaving the company. Takeover attempt as a sign of weakness on the stock market went down for the streaming service at the end of last year. At that time, he tried the entertainment company Warner Bros. Discovery, and he already signed a takeover agreement. But then the competitor Paramount Skydance interfered with its own offer and won the bidding battle. Many analysts viewed Netflix’s interim takeover as a sign of weakness, especially since the company had never been noticed with major acquisitions in the past. However, Netflix’s share price has not recovered even after withdrawing from the Warner race. Netflix’s revenue continues to grow in double figures, but other metrics are cause for concern. The number of hours spent on Netflix has only grown by two percent in the first half of the year. A major reason for this, according to many observers, is that Netflix has delivered comparatively few new hits this year that matched previous successful productions such as the series “Stranger Things” or the film “KPop Demon Hunters”. Netflix and other streaming services are also creating increased competition from video platforms such as YouTube and Tiktok. According to market research group Nielsen, Netflix’s share of U.S. television consumption fell from 8.8 to 7.8 percent in July compared to the previous year. YouTube accounted for more than 14 percent. Compared to Netflix, the Google-owned video service has the advantage of having to pay much less for its content. The company said it was aware of “investors’ concerns” about the growth of hours spent on Netflix. The company pointed out that its subscribers had responded to price increases this year in a similar way as in the past, and it described this as an indication that Netflix consumption was “healthy.” But it added that it wanted to accelerate growth in the number of Netflix hours. Overall, Netflix reported revenue growth of 12 percent to $12.9 billion for the third quarter, which was exactly what analysts expected. Net profit increased 44 percent to $3.7 billion. Earnings per share were slightly higher than expected. For the full year, Netflix predicts a revenue growth of 13 percent. The advertising business is expected to rise from $1.5 billion to $2.7 billion. So far, Netflix has promised a doubling to $3.0 billion. For the correction, Netflix blamed a slower than expected introduction of certain advertising products. The analyst Ross Benes of the market research group Emarketer called the lower forecast “disturbing”.