Netflix shares that they lost subscribers for the first time in 10 years, plunging 25%
Netflix reported on Thursday it lost over 200,000 subscribers for the first quarter.
Shares of Netflix fell by nearly 20% on Monday as the company said its subscribers dropped by over 2 million over its last quarter. This marks its biggest loss of subscribers in a decade.
A new study has suggested that the firm could lose about 2 million subscribers by the second half of the year. This is what we found in this case. Netflix said it expected 2.4 million net subscriber growth in the first three months. Analysts have forecast the numbers to reach 2.8 million.
The streaming giant reported quarterly revenue of $7.78 billion, up 10% from last year (compared to the $7.93 billion expected).
Worse yet, the company expects to lose another 2 million subscribers this current quarter, as it blamed password sharing and increased competition from rival streaming services for slowing revenue growth.
Netflix also said that suspending its service in Russia resulted in a loss of 700,000 subscribers, but even without that unforeseen circumstance, the company would still have only added 500,000 net additions last quarter.
How Netflix Has Responded
Netflix has increased its content spend, particularly on originals, amid intense competition in the streaming space.
To pay for it, it's hiked prices of its services. While the company is exploring other options for growth, like adding video games, analysts and investors are wondering what else Netflix can do to bolster revenue.
Crucial Background
Like other growth stocks, Netflix shares been especially hard-hit by surging inflation and rising rates, but a significant portion of the company’s recent struggles revolve around slowing subscriber growth amid increased competition. Rival platforms have been spending more money in a bid to gain market share as the streaming wars heat up. Facing threats from the likes of Disney+ and HBO Max, Netflix already spends the most on content, with a budget expected to reach more than $20 billion in 2022. Says Sergei Klebnikov
EPS:
$3.5 vs $2.89, according to a Refinitiv survey of analysts