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Is Netflix going broke?

Since Netflix’s announced its quarterly earnings, its stock has been under a lot of pressure. Netflix declared $7.2 billion in sales and a GAAP profit of $3.75 per share, outperforming analyst expectations on both earnings and revenue.

While the financial results exceeded expectations, the rate of subscriber growth fell short of expectations. The company added 3.98 million global streaming premium members in the first quarter, compared to a forecast of 6 million. In addition, Netflix expects to gain only 1 million premium, worldwide streaming members, in the second quarter of this year.

According to the company, ‘paid membership growth slowed due to a big Covid-19 draw forward in 2020 and a worse content slate in the early half of this year due to Covid-19 manufacturing delays.’ When new seasons of Netflix’s most popular series were released, the company projected a strong second half of the year.

Streaming continues to gain market share from linear TV, according to the company, which has been a long-term trend in the entertainment industry. Netflix is predicted to earn $9.89 per share this year and $12.99 per share in 2022, putting the stock at a forward P/E of roughly 40 despite the recent sell-off. Businesses must meet their growth targets at such valuation levels, or their stock would quickly decline, as Netflix did.

Also READ: How do actors get paid on Netflix?

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