The stock of Netflix (NFLX) is down 6% after the streaming service announced that it will no longer report quarterly membership numbers and average revenue per membership.
Management at Netflix said they are stopping the reporting of subscriber numbers as they want investors to focus instead on metrics such as revenue, operating margins, and free cash flow.
However, investors are taking the news badly and as a sign that subscriber growth may be slowing at the world’s biggest streaming platform.
Subscriber numbers are a way for analysts and investors to compare Netflix and its growth to competing streaming services such as those offered by rivals Walt Disney Co. (DIS) and Paramount Global (PARA).
Some Netflix rivals such as Apple (AAPL) and Amazon (AMZN) have never reported quarterly subscriber information for their streaming platforms.
News that the reporting of subscribers will be ending at Netflix overshadowed what was otherwise a strong first quarter print from the company.
Netflix reported earnings per share (EPS) of $5.28 U.S. compared to $4.52 U.S. that was expected on Wall Street.
Revenue for the January through March quarter totaled $9.37 billion U.S. versus. $9.28 billion U.S. that was estimated among analysts who cover the company.
Subscribers at Netflix totaled 269.6 million in Q1, which was ahead of expectations for 264.2 million subscribers. The number of subscribers rose 16% from a year earlier.
During an earnings call with analysts and media, Netflix executives said they are evolving from targeting subscriber growth to focusing on profits.
The company continues to rely on price hikes, a crackdown on password sharing, and an advertising-supported tier to boost its revenue.
In terms of guidance, Netflix said that subscriber growth in the second quarter of this year will be lower than in the first quarter due to what management called “seasonality.”
Prior to today (April 19), Netflix stock had risen 30% so far in 2024 and was trading at $611.15 U.S. per share.