Netflix (NFLX) said Wednesday that it will cut 6% of its workforce, or about 1,000 employees, marking the company’s largest reduction of employees since 2022.
The move comes as Netflix has faced a slowdown in growth over the past several quarters. The cuts will occur across the company’s global operations, with a focus on Netflix’s product, HR, tech, and legal departments, per an email to employees from co-CEOs Ted Sarandos and Greg Peters.
Netflix stock initially climbed roughly 0.3% Wednesday morning on the report, which was first reported by the Wall Street Journal, before reversing to a loss of roughly 0.5%.
70.57 +0.11 (+0.16%)
At close: October 14 at 4:00:01 PM EDT
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The stock has fallen roughly 40% over the past year as investors and analysts have evaluated struggles in both growth and engagement at the company
Netflix will “continue to invest aggressively in high impact areas” while “making focused choices across the business so we can keep delivering for our members, partners, employees and investors,” Sarandos and Peters said in their email to employees.
The company joins streaming competitor Disney (DIS) in announcing large-scale layoffs in recent months.
Netflix will report earnings next week, with analysts expecting cost savings to be a major focus for Sarandos and Peters. While earnings per share of $0.80 slightly edged out estimates of $0.79 per share in the second quarter, revenue of $12.56 billion underperformed the $12.58 billion expected by Wall Street.
Critically, FX-neutral revenue growth is projected to slow in the third quarter to 11% year-on-year from the second quarter’s 12% growth.
“We continue to see healthy acquisition and retention trends on the membership side, and our recent price adjustments are going well on the pricing side,” Netflix CFO Spencer Neumann said in response to questions on the company’s last earnings call on the FX-neutral growth slowdown.
For the third quarter, Netflix is projecting adjusted EPS of $0.82 per share, in line with Wall Street estimates, and revenue of $12.86 billion against estimates of $12.88 billion, per CIQ data.
The recent merger of Paramount Skydance and Warner Bros. Discovery under the single moniker Skydance (SKYD) could present another challenge for Netflix, according to Needham analyst Laura Martin.
The newly formed Skydance boasts two historic movie studios, several major streaming networks, highly valuable IP such as “Harry Potter,” and an annual content budget of $30 billion. That scale and content funding “threatens Netflix the most,” Martin wrote.
Whereas Skydance is expected to have 30 wide-release films that will move to its streaming platforms in 2027, Netflix is only expected to have 12 limited-release films, per Needham estimates.
Source: finance.yahoo.com
