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What if Netflix keeps losing subscribers year over year?

• reducesuffering 5y ago
  Well you’d need a few more Russia-scale service cutoffs, as this quarter was -700k from Russia and 500k additions globally, I believe. They do forecast 2m loss next quarter, not great for profit growth, but ultimately not as bad as they’re currently valued. Netflix definitely forecasted that the profit increase from price raises would overshadow profit loss from subscriber loss. They’ve shown remarkable stickiness to revenue over their tenure, it’s been unflinchingly rising forever. And as I’ve said, their costs have been massive investments into catalog, which will actually diminish over time once everyone has 1,000 shows to watch that last forever, without needing to invest in much new ones. That will bring fat gross margins for their immense revenue to further convert into profit years down the line. Even with flatlining revenue from subscriber loss, their 4x P/S means they will soon enjoy a fat 10 P/E (10% yearly return) + stable inflation adjustment in this crappy environment. That is, unless/until the share price adjusts, which it will eventually.
  • acchow 5y ago
    Ignoring Russia for a moment.... This is 500k net new subscribers globally. But Netflix doesn't break down into how many were new customers and how many existing customers they lost. If you could see these on a graph, you would likely see that their loss of existing customers has been climbing and their new incoming customers has been falling. Forecast this outwards, and the curves will cross resulting in a net loss of subscribers. This is why they are introducing the advertising-subsidized tier. To stop the bleeding of customers and return to growth.