Shares of Netflix jumped from $190 to more than $200 after reporting results for its fiscal second quarter in which it lost fewer subscribers than expected, reports CNBC. Previously, the streaming platform warned shareholders that it could lose about 2 million paid users, but the actual losses amounted to 970 thousand subscribers.
Netflix also announced that in early 2023, they plan to officially introduce a cheaper subscription plan to the service, which will include viewing advertisements. This became possible after signing advertising agreement with Microsoft.
“We’ll likely start in a handful of markets where advertising spend is significant,” Netflix said in its letter to shareholders. “Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one.”
Last quarter, Netflix warned investors it expected to lose about 2 million subscribers, but only lost about 970,000 in the three months ending June 30.
Netflix’s key results for the second fiscal quarter compared to the previous one, according to data from Refinitiv:
- Earnings per share: $3.20 vs. $2.94;
- Revenue: $7.97 billion vs. $8.035 billion;
- Paid subscribers: 220.67 million;
- Global loss of paid users: loss of 970 thousand subscribers against expected loss of 2 million.
In the third quarter, Netflix plans to add 1 million paid users, which should offset some of the losses in the first half of 2022.
Netflix also noted that it is in the early stages of its plan to combat password sharing. In some Latin American countries, the service has begun to block sharing access to a single subscription that is used in different households. The company offers such users to pay extra.
It is worth noting that Netflix shares, which last year were worth about $700 apiece, closed on Tuesday just above $200.