Netflix stock drops as viewing reports get a slimmer schedule
Netflix shares fell after hours as the streamer narrowed its revenue outlook and said its closely watched viewing report will move to once a year.
By Sal Moretti · Money Reporter
3 min read
Netflix shares took a hit Thursday after the company told investors they will be getting less frequent peeks at what people are watching on the platform.
The streaming company said in its shareholder letter that its “What We Watched” report, a closely followed batch of viewing data, will now be released once a year in the first quarter. Netflix had been publishing the report twice a year, according to MarketWatch.
Netflix said the change is meant to separate viewing-data releases from earnings day and steer attention back to the numbers it wants investors to judge most closely.
“The goal of separating the publication of the report from our earnings results is to keep the focus on our primary financial metrics — revenue and operating profit,” Netflix said in the letter, according to MarketWatch.
Investors did not cheer the update. Netflix shares fell 7.6% in after-hours trading Thursday, MarketWatch reported.
Mixed quarter, narrower outlook
The viewing-data move landed alongside a mixed earnings update and a tighter full-year forecast.
Netflix now expects full-year revenue between $51 billion and $51.4 billion, according to MarketWatch. Its prior range was $50.7 billion to $51.7 billion. The company left its operating-margin forecast unchanged at 31.5%.
For the second quarter, Netflix reported revenue of $12.56 billion. That was just under Wall Street’s expected $12.58 billion, MarketWatch reported.
Profit came in at 80 cents a share, one cent higher than analysts had expected, according to the report.
The company’s third-quarter forecast also landed light. Netflix projected revenue of $12.86 billion for the period, below analysts’ forecast of $12.99 billion, MarketWatch reported.
Wall Street wants more answers
The after-hours slide added to a rough year for the stock. Netflix shares were down about 21% for the year through Thursday’s close, according to MarketWatch.
MarketWatch reported that Wall Street has been watching for signs of weaker viewing trends as Netflix faces competition from YouTube and short-form video platforms.
Analysts have also raised concerns that some subscribers may be pushing back against recent price increases while dealing with higher living costs, according to MarketWatch. Other analysts have said the World Cup could disrupt normal viewing habits.
The results come as Netflix puts more money and attention into live-event programming, podcasts and its advertising business, MarketWatch reported.
The Wall Street Journal reported last week that Netflix has been considering live channels and streaming bundles, including a possible bundle with NBC’s Peacock.
For years, Netflix has tightly controlled how much audience information it releases. The “What We Watched” reports became one of the clearest windows into viewing on the service, which is why the shift to an annual schedule drew attention on Wall Street.
Now investors are left with a thinner stream of viewing data, a narrowed sales forecast and a stock that was already under pressure before Thursday’s update.
This story draws on original reporting from MarketWatch.