Netflix's ad stumble deepens fears its growth is hitting a wall
NFLX•Netflix's lower advertising sales forecast and outlook for a fourth consecutive quarter of slowing revenue growth intensified concerns about its growth prospects. More than 20 brokerages cut their price targets after the results, while the company has laid off 6% of its workforce and replaced two top programming executives.
1. Growth concerns mount
Netflix shares fell nearly 5% in Wednesday afternoon trading after the company forecast another quarter of slowing revenue growth. The stock has lost about a quarter of its value this year, and its lower advertising sales forecast raised concerns about a business long viewed as a potential growth driver.
2. Competition and changes
Analysts pointed to competition from YouTube and TikTok, as well as the challenge of producing major hits. Netflix has cut 6% of its workforce and replaced two top programming executives; Co-CEO Ted Sarandos said the changes would help focus on producing TV shows and films.
3. Analysts cut targets
More than 20 brokerages cut their price targets after the results, according to LSEG data. Analysts said incoming content chief Peter Rice could help sharpen the programming slate, while Netflix's push into gaming has yet to make a meaningful contribution.
