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- Investors' sentiments about Netflix (NASDAQ:NFLX) failed to soften over the weekend as they sent the streaming TV giant's shares down more than 6%, Monday, and Jefferies analyst Andrew Uerkwitz cut his rating on the company's stock.
- Uerkwitz took his view of Netflix (NFLX) to hold from buy, saying there is "too much uncertainty in the near term" surrounding the company following its disappointing quarterly report and outlook last week. On Thursday, Netflix (NFLX) said it added 8.28 million new subscribers during the fourth quarter of 2021, which fell short of its earlier forecasts of 8.5 million subscriber additions. Netflix (NFLX) also said it expects to add just 2.5 million subscribers during the first quarter of this year.
- Those numbers did Netflix (NFLX) no favors on Wall Street, as investors drove the company's shares down almost 22% on Friday.
- On Monday, Uerkwitz joined in what was a mostly negative chorus in response to Netflix's (NFLX) subscriber numbers, saying that after "thinking through potential scenarios for what happens next" for the company, it appears Netflix's (NFLX) spending on new content could be coming to a head.
- "Netflix subscribers are going nowhere," Uerkwitz said. "However, the cost of acquiring the incremental subscriber has likely become too high."
- Uerkwitz added that it seems like Netflix (NFLX) can't just rely on creating a sense of prestige, or exclusivity, around its own original content to drive multitudes of new subscribers to its service.
- "The best content slate we've seen is doing little to drive [subscriber] growth," Uerkwitz said. "If slower subscriber growth is the new normal, we would need to see a change in content [and] capital allocation coupled with a focus on new revenue streams to leverage the large user base [and] content library."
- Over the weekend, TV ratings-measurement company Nielsen (NYSE:NLSN) released data from its "Streaming Unwrapped 2021" report, which showed Netflix (NFLX) claiming the top nine slots for original programming streamed online. The show Lucifer, topped the chart, with 18.34 billion minutes streamed last year.