Netflix stocks experiencing unpredictable movements

After dropping by almost half since the beginning of the year, shares of Netflix are recovering.

The stock is up modestly in late trading after reporting better-than-expected earnings. Analysts polled by S&P expected earnings of $0.10 per share on $2.94 billion in revenue. The company turned in $0.03 per share on $3.3 billion in revenue.

Following the earnings report, Netflix said it now expects to add 5.3 million new streaming members in the current quarter, up from its prior guidance of 5 million. It also raised its full-year revenue outlook by $300 million, to $6.4 billion.

Analysts polled by S&P were expecting revenue of $6.39 billion. The company said it now expects to report a profit of $0.05 per share in the second quarter. It would be up from its prior forecast of a profit of $0.03 per share.

The stock had plunged as much as 22% on Friday, its steepest one-day decline since July 2012. The company counted on a significant increase in original content spending this year to help it keep growing. But so far, it’s been unable to keep up with competitors like Disney, which has a much larger content budget, and AT&T, which is investing heavily in its streaming service.

Investors’ concerns on Netflix

With the stock down nearly half since its all-time high, investors are concerned about the outlook for the company’s business. The shares are now trading at their lowest level since April 2020, when Covid-19 was in the early days of shutting down the U.S. economy.

The company’s shares are down almost 45% from their record intraday high in November, fueled by investor optimism around the launch of its new TV service. But so far, the company’s new streaming service has failed to live up to expectations.

The surprise popularity of “Squid Game” likely contributed to Netflix’s stock surge. However, it hasn’t been able to help it avoid a subsequent downfall. The stock is down and keeps falling in the coming days. The drop will have a significant impact on Netflix’s bottom line.

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