Netflix Reports Lower-Than-Expected Sub Losses; U.S. Sub Losses Projected To Continue Through 2022

Netflix posted its second streaming subscriber net loss ever in the second quarter, although net losses of 0.9 million came in well ahead of the guidance of 2.0 million losses. Management expects to gain a million subscribers in the third quarter, well below our previous projection. The firm plans to trial its ad-supported model in early 2023 in a few key markets. We still don’t believe these plans are likely to show up in the U.S. in the near term as we think that the lower-priced offerings will be first introduced in smaller markets much like the password-sharing plans are be trialed in South America. We retain our $280 fair value estimate.