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Light Revenue Forecast Overshadows Subscriber Jump

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Netflix’s second-quarter revenue fell short of Wall Street’s expectations, leading to an almost 9% drop in its shares. Despite adding 5.9 million new streaming customers from April through June and exceeding earnings predictions, the revenue miss and a weaker third-quarter revenue forecast overshadowed the positive news.

Its nearly 6 million subscriber additions outpaced the 1.9 million that Wall Street expected, reaching a total of 238.4 million subscribers worldwide as of the end of June.

Quarterly revenue climbed 2.7% from a year earlier to $8.2 billion, shy of analyst forecasts of $8.3 billion. The company estimated third-quarter revenue would reach $8.5 billion vs. Wall Street forecasts of $8.7 billion.

To combat market saturation in the United States and increasing streaming competition, Netflix has been exploring new revenue sources. The company introduced a cheaper tier with advertising and cracked down on password sharing to encourage paid accounts. However, while the subscriber base expanded, average revenue per member declined due to the lower prices in some regions.

Although Netflix’s password-sharing initiative showed early success, it limited opportunities for price hikes, which had previously driven revenue growth. As a result, Netflix’s stock faced short-term pressure, but the move could lead to future revenue growth.

The streaming giant remains optimistic about accelerating revenue growth in the second half of the year. It plans to create compelling shows and movies, improve monetization, expand its video game business, and enhance user experience.

The company’s focus on long-term revenue growth strategies and its dominance in the streaming industry continue to position it ahead of its competitors. However, investors are urged to temper their expectations given the company’s maturing market and the challenges in the streaming industry.

A graph of stock market

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Source: TradingView

Netflix’s clampdown on password sharing is turning out to be more of a long-term bet than many investors realized. And while the earnings results are causing some short-term pressure, and revenue acceleration might take longer than originally thought, the short-term weakness might provide a good entry point for long-term investors.

Netflix has further revenue opportunities ahead thanks to its removal of the basic tier of service in its core markets. The company is still in a far stronger position compared to rivals and remains the benchmark. It’s worth noting that Netflix is still in its own league, having built a profitable streaming model while its legacy media competitors struggle to do so in an increasingly difficult environment.

Active traders looking for magnified exposure to Netflix may consider our +3x Long Netflix and -1x Short Netflix ETPs.

ETPs have revolutionized the way investors gain exposure to a variety of asset classes, making investing more accessible, affordable, and transparent. These investment vehicles offer several benefits that make them an attractive choice for investors.

Our ETPs are designed to provide investors with a cost-effective way to diversify their portfolios and gain leveraged exposure to a wide range of assets, such as stocks, bonds and commodities that were once out of reach.

In summary, our ETPs provide a unique investment opportunity for investors looking for diversification, leverage, flexibility, cost-efficiency, and liquidity who seek to amplify profits in both rising and falling markets.



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Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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