Netflix Stock Tumbles As Investors Aren’t Amused It Will Stop Reporting Subscriber Numbers

Netflix has just announced that it will stop reporting quarterly subscriber numbers, which will kick off in the first quarter 2025 earnings, as it doesn’t view them as important as other metrics the service tracks. This comes after it had stopped providing guidance on paid membership numbers in 2023, and they say they will also now stop reporting average revenue per member.

The market is…not amused, Netflix stock is down 6.1% at the time of this writing, and 9% for the week (though up 75% for the year). Netflix tried to explain the decision, which does not seem to have mitigated this decline:

“As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF),” the earnings release says.

They go on to say that they also have new business through advertising and adding extra members, so memberships are only “one component of our growth.” And with so many tiers, different subscribers have different impacts rather than them being uniform.

The counter-idea to this seems to be that Netflix may be about to be tapped out in terms of the growth they’ve previously reported, and they do not want to be viewed as stagnant or losing market share in the future. Netflix has had a big subscriber surge when they implemented its anti-password sharing rules which caused many “freeloaders” to get their own subs, but that’s a card you can only play once.

Current numbers do not reflect Netflix stalling right now, even if that could come in the future. The new report says that Netflix added 9.3 million subscribers in the first quarter, hitting 269.6 million subscribers around the globe, far and away beyond any of its streaming competitors. Disney Plus, for instance, has around 150 million subscribers.

We will see if the market adjusts to this idea in time. I am reminded of a situation in the video game industry when Microsoft simply stopped reporting hardware sales for Xbox, instead focusing purely on overall revenue and things like subscriptions to Xbox live. In that case, however, that was because Xbox was clearly losing the hardware race to Nintendo and Sony and every quarter it just looked like more bad news. Here, Netflix is the clear market leader, but they appear to be heading off future complaints about a lack of the numbers continuing to go up forever, and they want to focus on other metrics they deem more “relevant” instead.

Follow me on Twitter, Threads, YouTube, and Instagram.

Pick up my sci-fi novels the Herokiller series and The Earthborn Trilogy.