Netflix (NFLX) stock plunged 25% in after hours trading after the streaming giant reported that it
lost 200,000 subscribers in this year’s first quarter.
The loss marked the first time that Netflix has lost any subscribers since 2011, and it comes as
the streaming service faces increased competition from Disney+ (DIS), Apple TV+ (AAPL),
Amazon Prime (AMZN) and other offerings.
Worse, Netflix forecast that it will lose another two million customers in the current second
quarter, setting up its worst year ever as a publicly traded company.
Investors and analysts had expected Netflix to add 2.5 million customers in the first quarter. The
shares, already down more than 40% year to date, fell more than 25% to $265.11 U.S. in after-
hours trading immediately after the company announced its Q1 results.
Netflix management pointed to four causes for the subscriber loss. The company said there are
100 million households that use its service and don’t pay for it, on top of its 221.6 million
subscribers. The company is experimenting with ways to prevent password sharing and convert
those viewers to paying customers.
Netflix’s latest results are having ramifications for all streaming companies. Disney’s stock fell
5.2% in extended trading after Netflix’s earnings, while Warner Bros. Discovery Inc., the owner
of HBO Max, declined 2.8%.
Netflix lost customers in three of its four regions, including more than 600,000 in the U.S. and
Canada. It blamed most of that attrition on a price increase, and said the decline was expected.
Russia’s invasion of Ukraine cost the company another 700,000 customers when it had to pull
its service in Russia, resulting in a loss of 300,000 customers in the Europe, Middle East and
Africa region.
Asia was a lone bright spot. Netflix added more than one million customers in the region,
buoyed by popular new titles such as the South Korean drama “All of Us Are Dead.”
First-quarter revenue at Netflix grew 9.8% to $7.87 billion U.S., missing analysts’ estimates.
Profit, at $3.53 U.S. a share, easily topped projections of US$2.91 U.S. For the current quarter,
Netflix predicts sales will grow 9.7% to $8.05 billion U.S., with profit coming in a $3 U.S. a share.