about 2 years ago • 3 mins
Netflix announced better-than-expected earnings late on Thursday, but the only thing investors couldn’t tear their eyes away from was its bleak outlook.
What does this mean?
Over 8 million new subscribers scrolled through their Netflix homescreens last quarter, nudging the company’s total up to 222 million. That helped give its revenue a 16% bump compared to the same time the year before, as well as pushed its profit up by a better-than-expected 12% – all the more surprising given that the company spent more on new content. But even Emily in Paris would struggle to put a positive spin on this: Netflix is expecting to bring in just 2.5 million new subscribers this quarter – far fewer than the 6.3 million analysts were expecting. That’ll seriously hamper the company’s profit down the line, which might be why investors initially sent its stock down 10%.
Why should I care?
For markets: Is Netflix pushing its luck?
Netflix’s disappointing subscriber forecast might partly be down to the announcement that it’s raising its subscription fee in Canada and the US. The company wants to use that extra cash to bolster its pipeline of programs, in hopes it’ll better be able to compete with the likes of Apple TV, Disney+, and Amazon Prime. And it’s true that Netflix has upped prices before, only to go on to add plenty of new customers in the next quarter. But if this turns out to be one hike too far, it won’t matter what Netflix is making.
The bigger picture: Netflix isn’t playing around.
Netflix has been making a push into mobile gaming too, and it already has a catalog of 12 titles that it might be hoping will broaden its appeal with a new demographic. Smart move: a recent report showed mobile games made up 52% of the entire gaming market last year, and the segment’s growing faster than consoles too.
Keep reading for our next story...
Deliveroo gave a better-than-expected trading update on Thursday, as the UK food delivery platform makes sure everyone adheres to their daily recommended intake of takeout.
What does this mean?
Most Brits have only made it through the last couple years by pushing restaurant-quality gyoza into their mouths in the fleeting moments between each sob. But there was always the risk that the end of lockdown would encourage them to go back to doing that in restaurants, rather than in their own homes. Not quite: Deliveroo reported that it added 37% more monthly active users last quarter compared to the year before, bringing its total to 8 million. Better still, they placed more orders on average than they did in the depths of the pandemic, helping push up the total value of orders by a better-than-expected 36%.
Why should I care?
For markets: A portion of worries.
Investors sent Deliveroo’s stock up 6% after the announcement, but they still have plenty to be hangry about. After all, the company’s share price has fallen around 50% since it listed on the stock market in March, and it’s not out of the woods yet: decades-high UK inflation is putting the squeeze on diners’ spending money, and an end to the country’s Omicron-inspired restrictions could lure them back to their favorite eateries. Then there’s the red tape: regulators are preparing to introduce new rights for delivery workers – rules the European Union reckons could cost the sector more than $5 billion a year.
The bigger picture: Who needs humans?
Uber’s hoping to find a canny way around that issue: the US food delivery service announced last month that it’s partnering up with self-driving vehicle company Motional to roll out driverless food deliveries Stateside early this year. Uber thinks it’s a good way to deliver to harder-to-reach places and cut out the expensive meatsack in the middle, which should save the company – and you – a garnishing of money.
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