Netflix is planning to cut even more positions due to a continuing drop in user subscriptions.
The company declined to comment but the next cutbacks may be comparable in magnitude to the round of reductions implemented in May.
During the last round, the company revealed that it will be cutting off around 150 of the streamer’s 11,300 employees in an effort to decrease costs and counter sluggish revenue growth.
The announcement comes as several technology and venture capital-backed firms have stated intentions to either block recruiting, revoke accepted offers, or lay off staff.
Netflix stock, which is presently selling at about $170 per share, has dropped more than 70 percent year to date, as part of a larger market sell-off that has hammered growth firms and fueled fears of a future recession.
To put this in context, Netflix’s share price reached around $690 (with a market worth of more than $300 billion) in November 2021, before credit card data revealed a slowdown in member additions.
In April, the corporation saw an surprise drop in subscriber of around 200,000.
It anticipates losing another 2 million subscribers in the current quarter.
The drop in subscribers has surprised the streaming giant, especially given the company saw a strong pull-forward impact during the pandemic, which brought in 37 million customers in 2020.
Nat Schindler, Bank of America senior analyst, told Yahoo Finance Netflix “seemed completely caught off guard” by the sudden drop in users.
He added the platform “hit that wall really fast at a really high rate of speed, and just suddenly stopped growing.”
He explained because of the sharp change, it will be very difficult for the platform to “switch its mindset” and transition from a high-growth company to a profit-maximizing one.
Overall, subscription streaming service growth has slowed compared to previous years.
Source: Yahoo! Finance