Apr 17, 2019

Netflix will burn more cash than expected in 2019

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Data: YCharts; Chart: Andrew Witherspoon/Axios

Netflix will bleed more cash this year than analysts expected, but the payoff won’t be more subscribers.

Driving the news: In its earnings report, Netflix said it expects its free cash flow deficit to be $3.5 billion this year — more than the $3 billion loss it previously estimated (the company says it's because of a change in corporate structure and investments in real estate and infrastructure).

  • Netflix also dialed back its expectations for subscriber growth, "anticipating a net add of 5 million paid subscribers for the second quarter," which is below Wall Street’s expectations for 6.09 million new paid members, as Axios’ Sara Fischer reports.
  • CEO Reed Hastings said last quarter that this year would be the peak for cash burn: "We’re still expecting free cash flow to improve in 2020 and each year thereafter, driven by our growing member base, revenues, and operating margins."

Why it matters: Wall Street has given Netflix’s cash burn a pass. The spend on content usually translates into more subscribers driven to the platform for said content. But investors’ knee jerk reaction was to sell the stock after its less-than-stellar guidance.

  • The stock rebounded after initially falling as much as 5% after the bell on Tuesday.

What to watch: With the launch of Disney+, viewers have yet another, cheaper option. This isn't lost on investors. Analysts, however, point out that streaming is not necessarily a zero sum game.

  • Of note: In the face of the heightened competition, Netflix is raising — not cutting — its monthly cost.

Go deeper: The revenue battles of Big Media vs. Netflix

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Public transit's death spiral

Illustration: Eniola Odetunde/Axios

Public transit systems across the country are experiencing a painful trifecta: Ridership has collapsed, funding streams are squeezed, and mass transit won't bounce back from the pandemic nearly as fast as other modes of transportation.

Why it matters: Transit agencies could see an annual shortfall of as much as $38 billion due to the coronavirus pandemic, according to TransitCenter. At the same time, they're more important than ever, with more than 36% of essential workers relying on public transportation to get to work.

World coronavirus updates: London mayor says U.K. nowhere near lockdown lifting

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Prime Minister Jacinda Ardern offered hope in the fight against the novel coronavirus, saying she believes New Zealand has "turned a corner" after two weeks of strict lockdown measures. But London Mayor Sadiq Khan has said the U.K. is "nowhere near" lifting restrictions.

The big picture: COVID-19 has killed over 82,000 people and infected 1.4 million others globally as of early Wednesday, per Johns Hopkins data. Global recoveries have surpassed 301,000. Spain has reported the most cases outside the U.S. (more than 141,000) and Italy the most deaths (over 17,000). Half the planet's population is on lockdown.

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Wisconsin may be the start of the 2020 election wars

Illustration: Aïda Amer/Axios

Wisconsin voters braving lines in face masks — after a last-minute Supreme Court ruling against extending the absentee deadline — could foreshadow a nationwide legal struggle over how to conduct elections during the coronavirus outbreak, election experts say.

Why it matters: "It's a harbinger of what's to come in the next skirmishes in the voting wars" from now through November, Richard Hasen, a professor and national election law expert at the University of California, Irvine, told Axios.