Netflix subscriber growth slows after pandemic boom, shares fall 11%
Netflix Inc (NFLX.O) said on Tuesday that sluggish development of TV shows and movies during the pandemic affected subscription growth in the first quarter, bringing shares of the world’s largest streaming service down 11%.
From January to March, about 3.98 million users signed up for Netflix, which was less than the 6.25 million average estimate of analysts polled by Refinitiv.
In the second quarter, Netflix expects to add just 1 million additional video subscribers. Analysts had predicted a figure of approximately 4.8 million.
Netflix shares fell 11% in after-hours trade to $489.28, erasing $25 billion from the company’s market capitalization. Its value has increased by 27 percent in the last year, relative to a 63 percent surge in the tech-heavy Nasdaq Composite Index (.IXIC).
Netflix stated that it did not think rivalry improved significantly in the quarter or had an effect on new sign-ups “as the over-forecast was across all of our regions.”
Membership development is expected to increase in the second half of the year, as the group launches new seasons of “You,” “Money Heist,” and “The Witcher,” as well as the adventure film “Red Notice,” among other names.
Netflix added a staggering 15.8 million subscribers a year ago, when the pandemic pushed viewers all over the planet to sit at home. The corporation announced on Tuesday that the pandemic had hampered the production of new series.
“These trends are also leading to a lighter content slate in the first half of 2021, and therefore, we conclude, slower membership development,” the company wrote in its quarterly shareholder letter.
Analysts predict that as COVID-19 vaccines expand and more adults leave their houses, people will spend less time flowing out of their living rooms.
Rival media giants have proclaimed streaming to be their top target and are investing billions of dollars to deal with Netflix. In March, Walt Disney Co’s (DIS.N) Disney+ reached 100 million subscribers. At the end of March, Netflix had 207.6 million gross streaming subscribers.
According to Kantar Media, Netflix’s share of new U.S. viewers dropped to 8.5 percent in the third quarter, down from 16.2 percent in the same timeframe a year earlier.
During the year, Netflix lost one of its most famous titles as the corporate sitcom “The Office” migrated to Comcast Corp’s (CMCSA.O) Peacock streaming service.
During the year, Netflix increased its monthly prices in the United Kingdom, Germany, Argentina, and Japan.
There were 1.8 million new clients in Europe, 1.36 million in Asia, and 360,000 in Latin America.
“What was unexpected was the severity of the downturn in foreign markets, where rivalry is considerably smaller,” said Eric Haggstrom, an analyst at eMarketer.
Except goods, the organisation paid $3.75 a share in the first quarter, outperforming market expectations of $2.97 per share.
Revenue increased to $7.16 billion from $5.77 billion in the previous period, exceeding forecasts of $7.13 billion.
Net profits increased from $709 million, or $1.57 per share, a year ago to $1.71 billion, or $3.75 per share.