New York (CNN Business) — The actions of Netflix they fell 20% in following-hours trading on a weak outlook for their future growth.
Netflix now has 221.8 million subscribers worldwide and added 8.3 million subscribers in the fourth quarter of 2021, the company reported Thursday.
That number fell short of the streaming service’s own expectations, which slightly overestimated the number of subscriptions (8.5 million).
The big news, however, was that the company also forecast that it would have 224.3 million subscribers by the first quarter of 2022. That’s a growth of just 2.5 million, which is less than what analysts were expecting.
Netflix’s fourth-quarter profit was $607 million, up from $542 million in the year-ago quarter. Revenue increased 16% to $7.7 billion.
The company said in its letter to investors that competition from streaming services “may be taking a bit of a toll on our marginal growth.” However, he added: “we continue to grow in all the countries and regions where these new streaming alternatives have been launched.”
“This reinforces our view that the biggest opportunity in entertainment is the transition to streaming,” the company said.
Netflix noted that while “retention and engagement remain healthy,” its growth “has yet to accelerate back to pre-Covid-19 levels.”
The company attributed this to “several factors, including the current rise in Covid-19 and macroeconomic difficulties in various parts of the world.”
The streaming giant’s waning growth is one of the main reasons the company announced Friday that it would raise prices in the United States and Canada, two of its biggest markets.
Netflix increases its subscription prices
The US subscription price Netflix’s standard plan increased $1.50 to $15.49. The basic plan went up $1 to $9.99 and the premium plan went up $2 to $19.99. Given competition from Disney+ and HBO Max, which is a unit of WarnerMedia, the parent company of CNN, Netflix is trying to offset its slow growth by increasing subscription prices.
One bright spot for the streaming giant was that in the US and Canada subscriptions increased by 1.2 million in the fourth quarter, a sizeable jump from the roughly 70,000 subscribers added in the previous quarter.
Netflix’s massive crash on Thursday affected other streaming companies as well. In following-hours trading, Disney shares fell regarding 4.5% and Roku shares fell 6%.