In a statement, the company said.
“Unfortunately, today we have laid off approximately 300 employees.”
“While we continue to invest significantly in our business, we have made these adjustments to grow our costs in line with slower revenue growth. We are very grateful for all they have done for Netflix and are working hard to support them through this difficult transition.”
Netflix is experiencing a challenging period. Its stock has plunged more than 70% since the beginning, spooking many investors. This has been caused by both the global situation and the associated sell-off in tech stocks, as well as the publication of quarterly results for the first quarter of this year, where Netflix reported a 200,000 drop-in users. According to sources, subscribers are also expected to decline by as much as 2,000,000 in Q2.
Adding to the covid pandemic, Netflix has been one of the winners, recording 37 million new subscribers in 2020.
Netflix needs to rebuild its business
According to Bank of America analyst Nate Schindler, Netflix should rebuild its business.
“Can Netflix rejigger its business to be profitable and very cashflow positive? That remains to be seen.”
He further adds that the company should change the way it thinks about its business and no longer just be a high-growth company, but become a profit-maximizing company.
This is, of course, easier said than done, as, for example, one of Netflix’s main advantages is the huge amount of content it owns. Creating such content costs Netflix a large part of its budget and limiting it could erode the attractiveness of the platform, and other platforms such as Disney+ or HBO Max could suddenly become more attractive to viewers.
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So, we will see what the company presents us in its second-quarter results this year and if the 2,000,000 user loss is indeed confirmed along with the poor financial results, we can expect to see further declines in this stock again.