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Netflix (NFLX) Continues to Fire Employees to Cut Costs
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Netflix (NFLX - Free Report) is laying off about 300 employees globally across multiple business functions to reduce costs amid slowing revenue growth. The latest job cuts announcement followed the layoff of 150 employees last month.
While most of the laid-off employees were based out of the United States, there have been cuts in the Asia Pacific, Latin America and Europe, the Middle East and Africa (“EMEA”) as well.
The near-term outlook is not enthusiastic as Netflix expects to lose two million paid subscribers in second-quarter 2022. This Zacks Rank #4 (Sell) company has been struggling so far in 2022, primarily due to stiff competition, the unfavorable impact of account sharing, a weak economy, multi-decade high inflation, the Russia-Ukraine conflict and some lingering COVID-19 disruptions.
In first-quarter 2022, Netflix reported its first loss of 200K subscribers since October 2011, causing its stock to drop 23%.
The company is also exploring lower-priced, ad-supported tiers in a bid to bring in new subscribers after years of resisting advertisements on the platform. Comcast’s NBCUniversal and Alphabet’s Google are reportedly leading the race for a tie-up with Netflix to help it create an advertisement-supported subscription plan.
Netflix is also working to crack down on rampant password sharing. It noted that in addition to its 222 million paying households, there are more than 100 million additional households through account sharing.
Netflix Joins Other Tech Giants to Cut Costs and Pause Hiring
Netflix is betting that cost-cutting measures and ad-supported tiers on the streaming platform might aid performance and help impede the 69.9% slump in shares in the year-to-date period, compared with the Zacks Consumer Discretionary sector’s fall of 36%.
Netflix’s layoffs, while tied to its slowdown of revenues, are part of a larger contraction of jobs within the tech industry. Several tech companies recently announced hiring freezes and layoffs, such as Facebook’s parent company, Meta Platforms (META - Free Report) , Spotify (SPOT - Free Report) , Microsoft (MSFT - Free Report) , NVIDIA, Intel, Amazon, Tesla, Uber and Robinhood, among others.
Meta is limiting its intake of new employees to cut costs due to weak revenue forecasts. Facebook's parent company is pausing or slowing down hiring for most mid-to-senior level positions after announcing a strategy to expand into the metaverse. The social media giant has 71,970 employees worldwide.
Spotify, the world's largest online streaming service, has been on a spending spree, plowing cash into its podcast division, in an effort to dive deeper into the higher-margin business. But the company isn't immune to the current economic backdrop. Spotify will cut back on its hiring plans by 25%, meaning that the company will not stop hiring new employees but will bring on fewer workers than originally expected in the year ahead.
Microsoft is slowing down the hiring for its Office, Windows, and Teams groups to better prepare itself for the coming fiscal year and contend with the current economic environment. The tech giant reported strong fiscal third-quarter earnings, with a 26% year-over-year increase in cloud revenues. However, in early June, the company revised its fiscal fourth-quarter revenue and earnings guidance downward, citing the impact of foreign exchange fluctuations. The tech giant has 181,000 employees.
Image: Bigstock
Netflix (NFLX) Continues to Fire Employees to Cut Costs
Netflix (NFLX - Free Report) is laying off about 300 employees globally across multiple business functions to reduce costs amid slowing revenue growth. The latest job cuts announcement followed the layoff of 150 employees last month.
While most of the laid-off employees were based out of the United States, there have been cuts in the Asia Pacific, Latin America and Europe, the Middle East and Africa (“EMEA”) as well.
The near-term outlook is not enthusiastic as Netflix expects to lose two million paid subscribers in second-quarter 2022. This Zacks Rank #4 (Sell) company has been struggling so far in 2022, primarily due to stiff competition, the unfavorable impact of account sharing, a weak economy, multi-decade high inflation, the Russia-Ukraine conflict and some lingering COVID-19 disruptions.
In first-quarter 2022, Netflix reported its first loss of 200K subscribers since October 2011, causing its stock to drop 23%.
The company is also exploring lower-priced, ad-supported tiers in a bid to bring in new subscribers after years of resisting advertisements on the platform. Comcast’s NBCUniversal and Alphabet’s Google are reportedly leading the race for a tie-up with Netflix to help it create an advertisement-supported subscription plan.
Netflix is also working to crack down on rampant password sharing. It noted that in addition to its 222 million paying households, there are more than 100 million additional households through account sharing.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
Netflix Joins Other Tech Giants to Cut Costs and Pause Hiring
Netflix is betting that cost-cutting measures and ad-supported tiers on the streaming platform might aid performance and help impede the 69.9% slump in shares in the year-to-date period, compared with the Zacks Consumer Discretionary sector’s fall of 36%.
Netflix’s layoffs, while tied to its slowdown of revenues, are part of a larger contraction of jobs within the tech industry. Several tech companies recently announced hiring freezes and layoffs, such as Facebook’s parent company, Meta Platforms (META - Free Report) , Spotify (SPOT - Free Report) , Microsoft (MSFT - Free Report) , NVIDIA, Intel, Amazon, Tesla, Uber and Robinhood, among others.
Meta is limiting its intake of new employees to cut costs due to weak revenue forecasts. Facebook's parent company is pausing or slowing down hiring for most mid-to-senior level positions after announcing a strategy to expand into the metaverse. The social media giant has 71,970 employees worldwide.
Spotify, the world's largest online streaming service, has been on a spending spree, plowing cash into its podcast division, in an effort to dive deeper into the higher-margin business. But the company isn't immune to the current economic backdrop. Spotify will cut back on its hiring plans by 25%, meaning that the company will not stop hiring new employees but will bring on fewer workers than originally expected in the year ahead.
Microsoft is slowing down the hiring for its Office, Windows, and Teams groups to better prepare itself for the coming fiscal year and contend with the current economic environment. The tech giant reported strong fiscal third-quarter earnings, with a 26% year-over-year increase in cloud revenues. However, in early June, the company revised its fiscal fourth-quarter revenue and earnings guidance downward, citing the impact of foreign exchange fluctuations. The tech giant has 181,000 employees.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.