Netflix ($NFLX) shed more than $55 billion in market cap, down 36% on the day, as the stock got destroyed on the first subscriber loss in more than 10 years.
Increased competition, easing mandates, and more people spending time outside as well password sharing have contributed massively to the loss of subscribers.
Netflix $NFLX 1Q22 Results Summary:
Revenue +10% YoY
Operating Income +1% YoY
Operating margins 25.1% vs 27.4% in 1Q21
Diluted EPS -6% YoY
Net adds -0.2 million subscribers vs consensus +2.6 million
Here is the official explanation for their slowing growth:
Growth is slowing everywhere and we expect more pain from other high-growth companies. Curious to see Tesla’s ($TSLA) earnings after the close today. It will be very important for the indices to have it beat and provide good guidance, otherwise, we are going down much more.
Bonds rallied a bit today as 10-year yields moderated to 2.85% from an intraday high of 2.98%
Yields went down and Nasdaq went down with it too. The growth scare from Netflix outweighs the valuation adjustment from lower yields.
Notice S&P500 benefitted from the lower yields today but Nasdaq didn’t.
$ARKK gave up all yesterday’s gains and some. Its top holdings include Tesla ($TSLA) and Roku ($Roku), the latter suffering as a sympathy play from Netflix’s downfall.
Get ready for the ride down, or the elevator up.
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