Netflix posts decent financial results but investors were let down

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On Tuesday Netflix released its financial results for the third quarter that ended on 30th September.

The headlines are that 2.2 million joined Netflix in the third quarter of this year which is far lower than the 10.09 million it saw added in Q2 2020.

Revenue for the quarter clocked in at $6.43 billion, a 4.3 percent increase from Q2. Netflix points to a two percent increase in average revenue per user (ARPU) as the driver behind this increase citing a, “favorable plan mix in our UCAN [US and Canada], LATAM [Latin America] and APAC [Asia-Pacific] regions plus intra-quarter appreciation in the Euro and British pound which helped lift EMEA [Europe, Middle East and Africa] ARPU”.

While this is all seemingly good news, for investors it wasn’t.

On the back of this news Netflix’s share price fell five percent. It has recovered somewhat, but is still one percent lower than when trading closed on Tuesday.

This is because Netflix failed to meet its own projections set in Q2. Customer adds were below the forecasted 2.5 million, and profitability fell short.

With that said, the firm is hopeful that this operations will return to normal, you know, once the pandemic passes.

“The state of the pandemic and its impact continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID. In turn, we expect paid net adds are likely to be down year over year in the first half of 2021 as compared to the big spike in paid net adds we experienced in the first half of 2020,” said Netflix.

The platform added that it doesn’t see fluctuations as “that meaningful” in the broader scheme of internet entertainment adoption. Netflix expects a strong future of growth, but if it’s not making investors happy, that future might be cut short.

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.