Hastings has also cited the growth in Latin America is slowing as the economy is struggling to recover from the pandemic and it has affected the demand for the streaming service. As such, people are getting out rather than staying home with Netflix. Majority of the countries have decided to live with Covid even though Omicron is a more contagious variant. It should be obvious by now that the positive effect of the pandemic – putting people at home and they have nothing to do so they subscribe and watch Netflix – is wearing off. Netflix’s latest guidance has made investors anxious about its future, the stock tanked 25% following the earnings release. There is no good news on the horizon as Netflix expects to lose another 2m subscribers in the second quarter of 2022. iii) Worrying guidance from Netflix’s management This was a far cry from analysts’ expectation of 2.5m new subscribers. In its 1Q22 earnings report on 19 April 22, Netflix reported a loss of 200,000 subscribers, the first loss since 2011. However, macroeconomics alone doesn’t explain Netflix’s crash. No one knows when this environment would stabilise, my gut feel is that we are still early and that there’s still room for these stocks to slide. Overall, this year has been bad for growth and tech stocks in general as the rising interest rate environment is causing a valuation reset. Why did Netflix’s stock crash? i) Macro Environment Here, I’ll discuss the reasons for Netflix’s crash, its (possible) future and hopefully give you an idea of what you should do as an investor.
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