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Netflix (NFLX -0.88%) shareholders have little to celebrate in 2022. Shares are down nearly 70% following some tough earnings reports that have investors questioning whether the video subscription business the streamer loses his mojo boost, along with his gain. the next things on tap to get worse.

Some of these fears are overblown.

Netflix on Tuesday announced its second quarter earnings results which contained a lot of good news about the business. Of course, revenue growth is still hitting the wall. But subscriber trends are back in solid territory, and Netflix’s biggest product growth is anything but broken.

Let’s take a look at three bright spots from this latest earnings report.

1. Management has a better grip

One of the most troubling aspects of the latest earnings reports is the fact that CEO Reed Hastings and his team are unsure about why the business is suddenly losing subscribers. First, the executives blamed the impact of the development from the early days of the epidemic. See the article : The best tool for starting a business. Management then listed a number of factors, including competition, password sharing, and reduced smart TV requirements.

This week’s report contains a number of confirmations. “We now have more time to understand these issues,” Hastings said in a letter to shareholders, “and how best to address them.” The way forward involves increasing the content portfolio, streaming experience, and marketing and pricing methods.

The good news is that this strategy is better than the kinds of efforts Netflix has been pursuing for the past decade. In other words, the actual growth model is not good.

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2. Binging content still works

Netflix raised eyebrows when it decided to break out of its regular schedule of content releases to tease the availability of the new season of Stranger Things. Read also : Events group Hyve is selling the Ukrainian company through a management buyout. Investors are worried that this change is a sign that the competition is weakening as it is forced to use competitive strategies.

The company isn’t changing its brand, though, and plans to continue releasing almost its entire lineup at the same time. Netflix original content continues to set viewership and engagement records and is making a huge cultural impact. The success of Stranger Things is a testament, Hastings said, to the ability of Netflix’s “binge [with] a week at a time release strategy.”

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3. The steady outlook

Management’s Q3 outlook describes a strong, stable business. Subscriber profits will return, the company said, after falling two quarters in a row. On the same subject : Business Intelligence – how New York’s jets and their corporate partners have evolved. Revenue growth will decline by around 12% after accounting for currency fluctuations, compared to 13% in the previous quarter. Netflix has said in the past that sales of about 20% of the year represent a good goal for the business.

Operating profit margin will remain at around 20% of sales, again, in line with previous management forecasts. Together, these updates suggest that Netflix is ​​returning to crime mode after stumbling over the past six months.

It may be difficult to accelerate subscriber growth in the next few quarters due to competition and a possible economic downturn. But Netflix also enjoys competitive advantages it didn’t have a few years ago.

It’s a good cash eater, generates over $30 billion in annual revenue, and has a huge catalog of world-famous movies. Investors shouldn’t overlook the value of these assets, which position Netflix as a leader in an on-demand entertainment industry that has the potential to grow for decades.

Demitri Kalogeropoulos has a role in Netflix. The Motley Fool has a position on it and recommends Netflix. The Motley Fool has a disclosure policy.

Demitri Kalogeropoulos has a role in Netflix. The Motley Fool has a position on it and recommends Netflix. The Motley Fool has a disclosure policy.

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