Investors are not happy, Netflix’s stock price plummets, plans to stop announcing subscriber numbers

Netflix just announced that it will stop reporting quarterly subscriber numbers starting with revenue in the first quarter of 2025 because it believes it is less important than other metrics the service tracks. This comes after the company stopped providing guidance on the number of paying members in 2023, and will also stop reporting average revenue per member going forward.

The market is… not interesting. Netflix stock is down 6.1% at the time of this writing and is down 9% for the week (up 75% for the year). Netflix tried to explain this decision, but the decline doesn’t seem to have eased.

“As stated in a previous letter, we focus on revenue and operating margin as our key financial metrics, and engagement (i.e. time spent) as the best indicator of customer satisfaction. “When we first started, membership growth was a strong indicator of our future potential, but now we are generating significant profits and free cash flow (FCF).” is listed.

They also say membership is just “one element of our growth” as they also bring in new business through advertising and adding additional members. Also, because there are so many layers, different subscribers have different, rather than uniform, impacts.

The counter-argument to this is that Netflix may be about to be weeded out in terms of the growth it has reported so far, and they don’t want to be seen as stagnant or losing market share in the future. , that seems to be the case. Netflix’s introduction of anti-password sharing rules led to a huge surge in subscribers, leading many “freeloaders” to get their own subscriptions, but it’s a card you can only play once.

The current numbers don’t reflect Netflix’s current slowdown, even if it could happen in the future. According to a new report, Netflix added 9.3 million subscribers in the first quarter, and worldwide it reached 269.6 million subscribers, far surpassing its streaming competitors. For example, Disney Plus has approximately 150 million subscribers.

We will see if the market adapts to this idea in time. It reminds me of the situation in the video game industry where Microsoft simply stopped reporting Xbox hardware sales and instead focused purely on overall revenue, Xbox Live subscriptions, etc. However, in this case, it was because Xbox was clearly losing the hardware race against Nintendo and Sony, and every quarter seemed to bring more bad news. It’s clear that Netflix is ​​the market leader here, but it seems like they’re trying to avoid future complaints about the numbers not going up forever, and are instead trying to move on to other companies they think are more “relevant.” We want to focus on metrics.

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