Netflix falls in after-hours following earnings report

Netflix reported mixed earnings, posting 3.98 million added subscribers in the first quarter of 2021, missing Wall Street’s estimate of 6.29 million. Yahoo Finance’s Jared Blikre breaks down the key metrics.

Video transcript

ADAM SHAPIRO: Netflix earnings are out. The stock is tanking. It's down 10% in after hours. Jared, what's going on?

JARED BLIKRE: Yeah, it's all about those subs. And we knew the comparisons from one year ago were going to be tough, but check out these numbers here. First quarter paid streaming, that changed. It came in at 3.98 million. It sounds like a lot, but the estimates were for about 50% higher-- 6.29 million. So that's a huge mess right there. And then their outlook pretty dismal for the next quarter. Second quarter streaming, they're seeing those subs coming in at plus 1 million. The estimate was for 4.44 million. So, proving to be a little bit more difficult than they thought in terms of getting those subs, keeping those sub numbers up.

Here's something that might get the attention of shareholders, at least in a bullish way. They are on track for 2021 free cash flow to be about breakeven. That is a huge advance, somewhat expected. But there was a lot of-- there was some uncertainty about that, if they were going to be able to pay for their programming, which, by the way, they haven't done much over the last year. I'm not seeing a lot of commentary on that, probably going to be more in the call. But, you know, investors are definitely going to want to focus on the timetable for Netflix to get back into production mode because people need their programs.

Here's another number. First quarter EPS came in at $3.75. That is a beat. Revenue was a little bit light, $7.16 billion. The Street was expecting just a tad more. You could almost call it in-line, but nevertheless, those sub numbers really getting attention here. If we can go to the YFi Interactive, I'll pull up a few charts. And you can see it's down 10%, 11% right now. And here is the price action over today.

And we're going to go back year to date, just kind of check out what's happening. Really been going sideways. Most of the gains came in the early part of COVID last year. You can still see up 25%. But since July or so of last year, really been trading sideways, probably going to test the bottom end of this range before long. So, watch out for 480. Don't really want to see that go. Bottom line, it's all about the subs. And they just weren't able to get as many, plus a little bit of a weak outlook, guys.