Spectacular increase in the number of Netflix subscribers but the share price down

Netflix increased the number of subscribers by as much as 16% during the quarter. The company significantly exceeded high market expectations, confirming that the share price increased by 90%. it's not a coincidence. The pressure for high profits means that Netflix prices in Poland may increase this year. Earlier, the company raised prices in the US, UK and France.

Netflix broke the bank

Yesterday, Netflix published its financial results for the first quarter of 2024. The company broke the bank by increasing its subscriber base by as much as 16% during the quarter, or by 9,33 million new subscribers, reaching 269,6 million. This is the highest increase in the number of users since 2020, i.e. since the beginning of the coronavirus pandemic. Importantly, the company significantly exceeded the expectations of analysts who expected an increase in the subscriber base by 4,8 million. subscription.

Thus, Netflix confirmed its leading position on the global streaming map and justified the high valuation of the company's shares, which have increased by over 30% since the beginning of this year and by almost 90% during the previous year. It is clearly visible that the policy of fighting against sharing passwords, previously considered controversial by many users, is working and increasing the company's profits. This is also the result of price increases; in October, subscription prices went up in the USA, Great Britain and France. Of course, a broad program offer that attracts viewers is also important. They include global hits such as the series "The Three-Body Problem" or strong domestic productions such as the Polish series "1670".

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In some markets (e.g. the USA), the company introduced a cheaper subscription with advertising, which turned out to be a spectacular success. It effectively reaches consumers who are more cost-conscious. It also allows some consumers to save money and purchase additional streaming services. Competition on the streaming market remains very high - both in the USA and in Poland.

The high increase in profits will enable the company to expand further thanks to the larger funds it can allocate to film and TV series production. In some markets, the company is also entering the live sports broadcasting market. Netflix still has a huge target market, taking away subscribers not only from other streaming services, but especially from traditional television.

The company forecasts a decline in revenues

On the negative side, it is worth noting the company's lower revenue forecast for the second quarter of this year. This indicates that subscriber growth will slow down. The company announced that from 2025 it will stop reporting quarterly changes in the number of subscribers. This will disappoint many investors because the change in subscriber numbers is viewed by most investors as basic information each quarter, especially during a period of high market expectations for the company.

High pressure for Netflix's good results in the coming quarters may mean price increases for the company's Polish customers. The company last changed prices in Poland (increases in higher plans and price reductions in the basic plan) in August 2021. Now, the company offers three plans in Poland priced at PLN 29, PLN 43 and PLN 60 per month. The price change may be related to the introduction of a cheap ad-supported plan in Poland. This plan could be even cheaper than the current basic plan, because in the US the ad-supported solution costs only $6,99, i.e. PLN 28,50.

Netflix subscription prices in the US and Poland

Source: Netflix