The hypothetical 500K increase is still well short of the 2.5 million projected increase, but we need to consider other transitory factors. Excluding the Russian accounts, Netflix would have reported a gain of 500,000 subscribers in the quarter. Netflix reported that it suspended its operations in Russia, resulting in a loss of 700,000 paid members. Also, we need to consider the impact that the Russian/Ukraine conflict has on the report. However, this hardly signals an end to the company's dominance in the streaming business. We see a big miss in Netflix's most important metric. The company reported 221.64 million paid members, vs. The terrible news was the 200,000 decline in subscribers, as analysts were looking for an increase of 2.5 million in the quarter. Unfortunately, revenue missed by $70 million, coming in at only 9.9% above last year's. Netflix reported a GAAP EPS beat of $0.62, delivering $3.53 in EPS for the quarter. Furthermore, Netflix is remarkably cheap now, the company's becoming more profitable, and its shares should appreciate considerably in the coming years. Moreover, Netflix is drastically oversold from a technical perspective here, and the company may be going through a transitory slowdown phase, not a permanent decline. However, its stock was highly overvalued at $700, and it's deeply undervalued now. How could Netflix go from $700 per share ($300 billion market cap) down to $180 ($80 billion market cap) in just five months? Is the company's business model broken, or is there a threat of Netflix going bankrupt? No, Netflix is fine, in my view. Remarkably, Netflix lost a whopping 48% in the post-earnings debacle, bringing its total decline to 75% from its all-time high reached in November of last year. Netflix's stock dropped by 35% on the first day of the selloff and cascaded by another 20% in the following days. Market participants sold first and didn't bother asking questions. Netflix reported a loss of 200,000 subscribers, the first negative quarter in subscriber growth in more than ten years. ( NASDAQ: NFLX ) shares cratered following the company's Q1 earnings announcement.
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