Netflix Inc. (NFLX)

Netflix Inc (NFLX) stock plunged by 9.09% following subscriber disclosure change, despite strong Q1 2024 results.

• Financial Performance Highlights: Netflix reported strong financial results for the first quarter of 2024, with revenue up 15% year over year to $9.4 billion and operating income reaching $2.6 billion, its best quarter ever for this metric. The company also provided upbeat guidance for the rest of 2024, expecting 13% to 15% top-line growth and raising its full-year operating margin guidance to 25%.
• Concerns Over Subscriber Disclosures: Despite the positive financial performance, Netflix's stock plunged 9.09% as investors expressed concern over a change in the company's disclosures regarding subscribers. While Netflix has traditionally reported its subscriber metrics, including ending Q1 with 270 million paid memberships, it announced that it will no longer report this number regularly starting next year.
• Management's Perspective: Netflix's management explained that the change reflects the company's evolution, with multiple subscription tiers and advertising revenue making the subscriber count less directly correlated with its financial performance. However, investors interpreted this change as a sign that Netflix may lose subscribers in the future, leading to the stock decline.

Shares of Netflix, Inc. (NFLX) dropped by 3.27% from $385.95 to $373.32 in the trading on Tuesday, October 10, 2023. The reason why NFLX stock down is due to its decision to discontinue its free mobile plan in Kenya, where users could access 25% of its content without a subscription for the past two years. Instead, Netflix is introducing a £4.99 ($6.07) monthly subscription plan with ads. This change reflects a shift toward a revenue-centric strategy, and while it may increase paid subscriptions in the Europe, Middle East, and Africa (EMEA) region, it has raised concerns among investors about subscriber growth and competition for Netflix in the region.