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Playtime’s Over

Posted October 20, 2021 at 1:25 pm

What’s going on?

Netflix announced better-than-expected quarterly results late on Tuesday, even if the streaming giant refused to admit what moral compromises it made to earn this kind of money.

What does this mean?

The influx of subscribers that Netflix saw at the height of the pandemic has been slowing down ever since the world got back to business. But things are looking up: the company brought in a better-than-expected 4.4 million subscribers last quarter, taking the total count to 214 million. Netflix is expecting that it’ll add 8.5 million subscribers this quarter too, which has put investors’ minds at ease: this sort of subscriber growth bodes well for the company’s future profit, which might be why they initially sent its stock up 2% after the announcement.

Why should I care?

For markets: This could be a good week for Netflix.

The 8.5 million subscribers Netflix reckons it’ll add next quarter is more than the 8.3 million analysts were expecting. That could be important: new analysis from Goldman Sachs has shown that Netflix’s outlook for the fourth quarter of the year usually comes in below expectations, which tends to lead to a decline in Netflix’s stock price over the following week. But since Tuesday’s outlook bucks that trend, the next seven days for Netflix’s stock could do too.

The bigger picture: A whole different Squid Game.

Netflix has been making more international shows recently, in a strategy that seems nothing short of a win-win: production costs tend to be cheaper abroad than they are in the US, and a wider range of content should help bring in more subscribers. The approach certainly seems to be working: the company thinks a little-known show called Squid Game – which cost just $21 million to make – is now worth almost $900 million, with more than 130 million viewers having watched at least a few episodes of the show.

Originally Posted on October 19, 2021 – Playtime’s Over

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