Netflix Craters On Subscribers Miss, Catastrophic Guidance Recent earnings reports from streaming giant Netflix have been a mixed bag: the stock tumbled one year ago when the company reported a huge miss in both EPS and new subs, which at 2.2 million was tied for the worst quarter in the past five years, while also reporting a worse than expected outlook for the current quarter. This reversed four quarters ago when Netflix reported a blowout subscriber beat and projected it would soon be cash flow positive, sending its stock soaring to an all time high - if only briefly before again reversing and then tumbling three quarters ago when Netflix again disappointed when it reported a huge subscriber miss and giving dismal guidance, leading to the second quarter when Netflix slumped again after the company missed estimates and guided lower. This again reversed last quarter when Netflix soared after it blew away expectations and guided to a whopper Q4. Which brings us to today, when the stocks has tumbled back to the middle of its range for much of the past two years, with investors on edge to find out not whether the company would confirm its impressive guidance. Said otherwise, how many new subscribers did Netflix add in the third quarter? That number, for the company which ended the third quarter with more than 213 million subs, will sway how the company’s stock moves in after-hours trading. In other wrods, will Netflix’s “monster quarter for content” translate into outsize subscriber gains? That’s the question Wells Fargo analyst Steven Cahall asked in a research note Wednesday. New films, such as “Red Notice” and “Don’t Look Up,” and the limited series “Squid Game” were the most-watched in Netflix history. Well, the answer in a word is no, because despite bearing modestly on revenue and EPS, NFLX missed on Q4 streaming adds, but more importantly, its Q1 subs forecast was an absolute disaster, and at just 2.50 million it was nearly 4 million below the street's estimate of 6.26 million. Here is what NFLX just reported for Q4. EPS $1.33, beating est. 81c Rev. $7.71B, matching est. $7.71B So far so good, or at least not terrible. But this is where the wheels fall off, because while the company had previously forecast 8.5 million Q4 subs, it achieved just 8.28 million paid subs (which still was just above the Wall Street estimate of 8.13 million), down 2.7% Y/Y/ This is how the company explained this miss: We slightly over-forecasted paid net adds in Q4 (8.3m actual compared to the 8.5m paid net adds in both the year ago quarter and our beginning of quarter projection). For the full year 2021, paid net adds totaled 18m vs 37m in 2020. Our service continues to grow globally, with more than 90% of our paid net adds in 2021 coming from outside the UCAN region. The Q4 subscriber miss was broken down as follows: UCAN streaming paid net change +1.19 million, +38% y/y, missing the estimate +596,839 EMEA streaming paid net change +3.54 million, -21% y/y, beating the estimate +3.45 million LATAM streaming paid net change +970,000, -20% y/y, missing the estimate +1.23 million APAC streaming paid net change +2.58 million, +30% y/y, missing the estimate +2.91 million But the real gut punch was the company's Q1 2022 guidance, where the company not only saw revenue of $7.9 billion, far below the $8.12 billion estimate, and EPS of 2.86 which was also below consensus of $3.37, but the worst of all is that the company now expects just 2.50 million streaming paid subs this quarter, some two-thirds below the consensus of 6.26 million. This was all traders needed to see, and the stock is now cratering after hours, tumbling more than $60 or over 12% after hours to $447. Tyler Durden Thu, 01/20/2022 - 16:13