What's going on?
Netflix is in a Good Place: the streaming giant announced better than-expected earnings late on Tuesday, and its shares initially jumped 10%.
What does this mean?
Netflix welcomed plenty of new subscribers when lockdowns kicked in early last year, but that growth slowed significantly in the third quarter. So investors might be relieved to see it was just a blip: the company gained almost 9 million new subscribers last quarter, blowing past analysts’ expectations of 6.5 million. And that figure’s arguably the most important one of all: it gives a good idea of how the company’s future income will look (tweet this).
Still, Netflix could boast a few other good numbers too: it revealed it’s expecting to earn enough cash this year to fund its own operations, rather than rely on investors or banks. The company even said it’s likely to buy back its own stock – a move that would push up its share price and make its investors very pleased indeed.
Why should I care?
For markets: Winner takes all.
Netflix promised to add another 6 million new subscribers this quarter, but the bigger question is whether it’ll outdo its streaming rivals – especially with Disney+ ramping up much quicker than expected. Its 74 million subscribers is a long way off Netflix’s 204 million, sure, but the Mouse House’s platform did only launch 14 months ago. That fact isn’t lost on investors: Disney’s shares have climbed 40% in the last three months, while Netflix’s have barely moved.
Zooming in: Someone make it stop.
Then again, this town is big enough for the both of them. That might be why they ended up taking the top spots in last year’s most-streamed content, with Netflix dominating the top 10 television series of 2020 and Disney leading the way in movies. Bored kids and exasperated parents might’ve had something to do with the latter: Disney+ subscribers played Frozen II for 15 billion minutes between them.