How can Netflix be reborn?

Netflix’s decade of continued growth came to a halt in the first quarter of 2022. The shares are in free fall and the outlook is even worse. The company lost 200,000 subscribers, and to make matters worse, Netflix sources estimate it will lose another 2 million subscribers in the second quarter of the year due to the growing competition and inflation which puts pressure on families now ready to reduce spending on non-essential goods.

In this report, we take a look at the four drivers that Netflix can aim for to get back on the road to growth.

Netflix has been an unstoppable locomotive for over a decade. The first quarter of 2022 marked the end of this run and the video streaming company lost 200,000 subscribers (the graph below does not include the first quarter 2022 figure). There could not have been a different outcome since it was Netflix who decided to suspend the service in Russia and this had led to the cancellation of 700 thousand subscriptions in one fell swoop. Without the (huge) Russian market, Netflix feels the pinch and investors are unforgiving.

Moreover, it turned out to be a big misstep against its own prediction earlier this year of increasing users by 2.5 million. But it doesn’t stop there: a loss of two million subscribers is expected in the quarter that has just begun. These numbers scared the market so much that Netflix shares plummeted by more than 30% on April 20, showing a retracement of more than 65% from the all-time high reached in 2021.