Netflix Inc. is one of the valuable companies in the world which people subscribe to as if it is their religion. You are either a sole abider of Netflix or you don’t follow it at all. There is no midway in between. The company is currently valued at 167 times the earnings over the past one year. The problem with Netflix is that if it breaks down for a moment then it hampers the faith of all the subscribers at once. This has happened recently when Netflix forecasted their number of new customers to join but in the end, only half the numbers of the forecast had subscribed to it.
Only 670,000 new customers from the United States joined and outside the U.S, Netflix could not gain many subscriptions either. In the entire company’s 5.15 million net streaming Netflix could not even match up to its own predictions that they declared in April. Even the third quarter results declared that the expectations of the stock analysts are shattered as the subscription count was below average.
The earnings of Netflix solely depend on the number of subscribers which gives a proof of their faithfulness as well as directly affects their financial imperative. The company has taken the biggest risk of splurging their investment in programming to turn into a powerhouse of global entertainment. So, on Netflix, nothing can bring a paradigm shift to the economy except their count of new subscribers. There was a significant growth in the number of subscribers after the first quarter of 2018 since the last quarter of 2017. However, again the numbers started to decrease as the results of the second quarter was declared.
Netflix has often pointed it out that sometimes their number of subscribers exceeds their forecast and sometimes they are unable to match up to their prediction. It is said that the international revenue kept on decreasing because of a strong U.S. dollar hurt. However, these seemed like an insufficient explanation for the low subscribers count.
So, what are the probable causes due to which the numbers are not increasing? Is there an increase in prices of the Netflix account discouraging the new U.S. subscribers to sign up or compelling them to quit? Are the potential customers not interested enough to invest in this format of original programming? Is this a massive lull in the growth of Netflix from which they will have a tough time to rise up? Well, none of the questions got answered yet by the media or the official authorities of Netflix.
The cost that is required for marketing of Netflix has currently doubled to $1 billion in the first half of 2018 as it generated a lot of attention from millions of viewers in early 2018 when it produced hundreds of movies and latest entertainment series. Even though it has experienced the downside recently by losing a lot of its existing subscribers and unable to gain new subscribers, yet it is not willing to give up. The investors decided to invest a whopping $18 billion in the upcoming years for producing more entertainment programs.
To know more about the earnings Netflix and other companies, keep visiting stocksearning.com not to miss an update.