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Illustration: Rebecca Zisser/Axios

Netflix's stock was down more than 5% in after-hours trading Tuesday after the tech giant reported that it missed expectations on global subscriber growth for the quarter.

Why it matters: Netflix experienced explosive growth during the first half of the year. It wasn't expected to match that growth this quarter, when lockdowns lifted and after new competitive services had launched, but analysts were still expecting it to meet expectations of at least 3.3 million net new global subscribers.

  • Netflix's stock ticked up ahead of earnings on Tuesday in anticipation of good news.

Details: The company met Wall Street estimates for its bottom line, but missed on earnings per share, suggesting that it spent more money on marketing and content relative to its subscriber revenues than investors had hoped.

  • In a letter to shareholders, Netflix said that the pandemic and its impact "continues to make projections very uncertain, but as the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID."
  • It also said that it expects paid net subscriber additions to be down year-over-year in the first half of 2021 as compared to the unprecedented spike in subscribers in the first half of 2020.

By the numbers, per CNBC:

  • Earnings per share (EPS): $1.74 vs. $2.14 expected, according to Refinitiv consensus estimate.
  • Revenue: $6.44 billion vs. $6.38 billion expected, according to Refinitiv.
  • Global paid net subscriber additions: 2.2 million vs. 3.57 million expected, according to FactSet.

What's next: The company forecasts it will add 6 million paid net subscribers globally next quarter, bringing its total global paid subscriber count to over 200 million.

  • That's still fewer new subscribers than the number Netflix brought in Q4 last year, but the company is still dealing with the fallout of the pandemic, which has made it harder to produce new content.

Go deeper ... Netflix's earnings over the past year:

Go deeper

Ina Fried, author of Login
Updated Jan 27, 2021 - Technology

Apple's quarterly sales top $100 billion for first time

Credit: Apple

Spurred by strong sales of the latest iPhones, Apple reported it took in a record $111 billion in revenue for the three months ended Dec. 31, as the company crushed expectations.

Why it matters: The move showed even a pandemic didn't dull demand for Apple's latest smartphones.

Ben Geman, author of Generate
Jan 27, 2021 - Economy & Business

What to watch for in Tesla's Q4 earnings report

Data: FactSet; Chart: Danielle Alberti/Axios

Tesla will report Q4 2020 earnings after markets close today, with analysts expecting a sixth consecutive quarterly profit for the electric vehicle maker that was reeling just a few years ago.

Why it matters: Tesla is the country's dominant EV company, and its trajectory affects overall adoption of the tech, even as more and more models from other companies are hitting the market.

California governor declares drought emergency for entire state

California Gov. Gavin Newsom speakinng to reporters in Los Angeles in September. Photo: Allen J. Schaben/Los Angeles Times via Getty Images

California Gov. Gavin Newsom (D) extended a drought emergency declaration to cover the entire state on Tuesday.

Why it matters: "California is experiencing its worst drought since the late 1800s, as measured by both lack of precipitation and high temperatures," per a statement from the governor's office. This past August was the driest and hottest one on record, "and the water year that ended last month was the second driest on record," the statement added.

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