Netflix announced its decision to cease sharing subscriber additions and average revenue per member from 2025. This decision has sparked concerns among investors about the streaming giant’s growth trajectory particularly in saturated markets.
The announcement comes at a time when Wall Street analysts anticipate a plateau in subscriber growth for Netflix in North America and Europe. Russ Mould investment director at AJ Bell highlighted the significance of transparency for investors and noted that hiding crucial metrics could dampen investor confidence especially as questions arise about Netflix’s maturity in various regions.
Although Netflix reported new customer acquisitions in the first quarter, its second-quarter revenue forecast fell short of market expectations. The decision not to disclose subscriber additions and average revenue per member starting from the first quarter of 2025 further fueled skepticism among investors.
Brandon Katz, an entertainment industry strategist for Parrot Analytics pointed out that while Netflix continues to dominate the market, the lack of transparency raises concerns about its long-term growth potential.
Following the announcement, Netflix’s stock plummeted by 6.6% before the bell with its market valuation expected to decline by over $17 billion. Similar to Meta’s Facebook and other tech companies, Netflix’s decision to withhold crucial metrics reflects a trend among companies facing slowing growth.
Goldman Sachs analysts emphasized the importance of assessing the sustainability of Netflix’s paid sharing initiatives amidst the removal of key metrics. Despite the concerns, Wedbush analyst Alicia Reese expressed confidence in Netflix’s business model citing its “insurmountable lead” over competitors.
Netflix attributed part of its success to its ad-supported streaming plans which attracted 9.3 million new customers in the first quarter nearly double the consensus forecast. However, Sophie Lund-Yates lead equity analyst at Hargreaves Lansdown raised concerns about Netflix’s ability to minimize churn as competitors introduce cheaper alternatives.
As investors grapple with uncertainties surrounding Netflix’s future growth, the company faces scrutiny over its strategic decisions and ability to maintain its competitive edge in the ever-evolving streaming landscape.
