Netflix To Step Into Spotlight, Kicking Off A Media Earnings Season Riddled With Anxiety

The report will have “wide-ranging implications for the stock and the media ecosystem,” in the view of Guggenheim analyst Michael Morris.

Last quarter, Netflix issued a warning about its second-quarter performance, saying it could shed as many as 2 million subscribers, though it continues to pace thebusiness with about 222 million worldwide. Investors last April reacted harshly to the company’s first subscriber losses in more than a decade, punishing the company’s shares, which had already fallen from their 2021 all-time high. Over the past six months, about two-thirds of the company’s market value has been destroyed.

A few items in particular will be center stage when Netflix steps into the spotlight: the subscriber narrative as well as updates on the rollout of a cheaper, ad-supported tier and efforts to curb free password sharing. The latter two initiatives were trumpeted by the company last quarter, though the about-face on advertising after years of insisting it would never take ads left a lot of observers flummoxed, especially given the hasty and scattered way it was communicated.

Posing a question in the title of his note to clients — “The First Streaming Recession?” — Swinburne paints a fairly grim picture for the media sector. “The pivot to streaming has not reduced the risk to media estimates from a slowing economy,” he wrote. “Advertisers and consumers likely pull back in a recession.”

MichelArouca

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