The global streaming giant Netflix Inc. on Tuesday reported a loss in subscribers for the first time in more than a decade and predicted further contraction in the second quarter, a rare setback for a company that has been a reliable growth engine for investors.
Netflix lost 200,000 subscribers in its first quarter, falling well short of its modest predictions that it would add 2.5 million subscribers.
Its decision in early March to suspend the service in Russia following the invasion of Ukraine meant the loss of 700,000 users. Shares of the company slumped 24% in following-market trading.
Netflix’s poor results hit other video-related stocks like Roku, which fell more than 6%; Walt Disney almost 4% and Warner Bros Discovery 2%.
Netflix, which currently has 221.6 million subscribers, had registered its last customer loss in October 2011.
Netflix ooffered a grim prediction for the next quarter, forecasting that it would lose 2 million subscribersdespite the return of long-awaited series like “Stranger Things” and “Ozark” and the debut of the movie “The Gray Man,” starring Chris Evans and Ryan Gosling.
Wall Street was targeting 227 million customers for the second quarter, according to Refinitiv data.
First-quarter revenue grew 10% to $7.87 billion, slightly below Wall Street’s forecast of $7.93 billion. Net earnings per share was US$3.53.
“The sheer number of households sharing accounts, combined with competition, is creating revenue headwinds to the upside,” Netflix said, explaining difficulties in capturing new customers.
The streaming service was expected to see slowing growth, amid intense competition from Amazon.com, Walt Disney Co, the newly formed Warner Bros Discovery Inc and deep-pocketed newcomers like Apple Inc.
Streaming services spent $50 billion on new content last year in an attempt to attract or retain subscribers, according to researcher Ampere Analysis. This represents an increase of 50% compared to 2019.
As growth slows in mature markets like the United States, Netflix is increasingly focusing on other parts of the world and investing in local language content.
