SHARE OF THE WEEK: Netflix must convince shareholders

Netflix will have to produce a blockbuster performance with its update next week.

The streaming giant, home to hit shows such as Squid Games, The Crown and Bridgerton, will have to tackle how it plans to retain customers who are thinking about canceling their subscriptions as the cost of living bites the crisis.

Netflix must convince shareholders its fortunes can be reversed after losing more than 1 million customers in the first half of this year, ending a decade-long subscriber growth. In an effort to stop this, Netflix unveiled a cheaper streaming plan earlier this week.

Analysts have pointed out that new UK customers could be attracted by the cost of the ad streaming plan which is £2 cheaper than the most basic package currently on offer.

But there are likely questions about how Netflix can prevent subscribers from staying on the lowest plan forever. As the global economy picks up again, Netflix will face the daunting task of raising its prices to get more money out of customers.

Netflix thinks it will increase its subscriber base by one million in the third quarter, bringing the total to 221.7 million.

The co-founder and co-chief executive of streaming giant Reed Hastings has forecast that third-quarter revenue will be 5 percent higher than a year earlier. But Netflix expects profits to be 29 percent lower compared to a year ago, at around £1.15 billion.

The group’s market capitalization peaked at £267 billion in October last year, although its shares have fallen about 61 percent this year.