Netflix announced that its profits have soared in the first three months of 2024, mainly as a result of the decision to remove the ability to share passwords.
The company added 9.33 million new subscribers in the first quarter of 2024, according to its first-quarter results, nearly double the average of 4.84 million analysts estimated. Its first-quarter revenue rose nearly 15% year over year to $9.37 billion. The company also recorded major hits in its content, such as crime drama Griselda, which helped the platform attract subscribers.
But Netflix made a move that raised questions. In its letter to investors, the company announced that it will no longer report revenue per subscriber based on quarterly subscriptions, starting in the first quarter of 2025. Those metrics have long been the main way Wall Street gauges performance of the company, but Netflix has tried to shift the focus to traditional figures like sales and profits. As he said, management will continue to report significant changes to its subscriber base.
According to Netflix, subscriber numbers have become “just one element of our growth,” asking investors to focus on earnings and revenue.
Some investors saw its surprise decision to stop reporting subscriber numbers as a sign that Netflix’s wave of customer growth may be coming to an end. Jamie Lumley of research firm Third Bridge wrote that the decision raises “questions about the growth prospects of Netflix’s subscriber base».
Other tech giants, including Facebook parent Meta and the former Twitter platform X, also stopped reporting monthly active user numbers as growth slowed.
Netflix’s share price has risen 30% since the start of this year, near its 2021 high. However, it has lost nearly 5% of its value since announcing it will stop reporting subscriber numbers. Netflix last raised the price of its popular “standard” programming in 2022.
The move followed an unusual drop in subscribers that surprised investors and heightened concerns that Netflix was losing its dominance in the industry it had pioneered.
