Netflix (NFLKS) has just released another round of cuts.
“Today, we unfortunately laid off approximately 300 employees,” a Netflix spokesperson said in a statement.
“While we continue to invest heavily in the business, we have made these adjustments to ensure our costs rise in line with our slower revenue growth. We are so grateful for all they have done for Netflix and are working hard to support them through this difficult transition,” the spokesperson continues.
Job cuts follow Netflix last wave of layoffs in may when the streamer laid off 150 employees. In recent weeks a number of technology companies and venture capital-backed firms announced plans to either suspend hiring, cancel accepted offers, or lay off employees.
Shares of Netflix, currently trading at around $170 per share, fell more than 70% since the beginning of the year amid a broader sell-off in the market that hit growth stocks and spurred talk about a potential recession.
By comparison, Netflix’s share price topped $690 (a market capitalization of over $300 billion) in November 2021 before credit card data showed a slowdown in customer influx.
The company announced an unexpected loss of subscribers in the first quarter 200,000 users in April. The company is expected to lose another 2 million subscribers in the current quarter.
On Thursday, Bank of America lowered its share price target, cutting it from $240 to $196 per share.
The major bank noted that streaming is now saturated and commercialized, adding that “Netflix as a ‘must have’ service.” [is] is becoming more of a curse than a blessing, with several indicators that future Netflix subscriber growth will need to take place outside of the United States.”
The sharp drop in new subscribers seems to have surprised even Netflix, especially after the platform experienced an intense pull effect during the pandemic that drew 37 million subscribers in 2020.
Netflix “seemed completely caught off guard” by the sudden drop in user numbers, Nat Schindler, senior analyst at Bank of America, previously told Yahoo Finance, adding that the platform “hit a wall very quickly at a very high rate and just suddenly stopped growing.”
He explained that the abrupt shift would make it very difficult for the platform to “switch its mindset” and move from a fast-growing company to a profit-maximizing company.
“Will Netflix be able to re-engineer its business to be profitable and very cash flow positive? That remains to be seen,” Schindler continued, adding that it would be difficult to predict the impact on Netflix’s bottom line if the company drastically cuts $18 billion of its annual content. conduct.
However, Schindler (who has an “Unsatisfactory” rating on the stock) said investors want the platform to “rationalize its spending levels to become generators based on new normal growth.”
In general, growth in subscription streaming services has slowed compared to previous years.
According to PVCAccording to the latest report from Global Entertainment & Media Outlook, SVOD’s domestic services will generate $25.32 billion this year, up 13% from 2021.
This is below the market growth rate of 19.5% in 2021, and even more than the decline compared to the monstrous growth rate in 2020 of 27% during the pandemic.