Netflix Inc (NFLX.O) said slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter, causing the share of the world’s largest streaming service to drop 11% on Tuesday.
About 3.98 million people signed up for Netflix from January through March, less than the average projection of 6.25 million analysts surveyed by Refinitiv.
Netflix estimated it will add just 1 million new streaming customers in the second quarter. Analysts had expected a forecast of nearly 4.8 million.
Shares of Netflix fell 11% during out of hours trading to $ 489.28. The stock is up 27% over the past 12 months, compared to a 63% rise in the tech-heavy Nasdaq Composite Index (.IXIC).
The company predicted that membership would accelerate in the second half of the year, when it released new seasons of “You”, “Money Heist” and “The Witcher” and action movie “Red Notice”, among others.
A year ago, Netflix added a record 15.8 million customers as the pandemic forced people around the world to stay at home. The company said on Tuesday that the pandemic was hindering the filming of new shows.
“These dynamics also contribute to a lighter slate of content in the first half of 2021, which is why we believe there is slower membership growth,” the company said in its quarterly letter to shareholders.
Analysts predict that people will spend less time streaming from their living room as COVID-19 vaccinations spread and more people move out of their homes.
Rival media companies have made streaming their priority and are spending billions to compete with Netflix. Walt Disney Co’s (DIS.N) Disney + crossed 100 million subscribers in March. The total number of Netflix streaming customers was 207.6 million at the end of March.
Netflix said it did not believe competition changed significantly in the quarter or affected the new sign-ups “as the over-forecast was in all our regions.”
But Netflix’s share of new US subscribers fell to 8.5% during the quarter from 16.2% in the same period a year ago, Kantar Media said.
During the quarter, Netflix lost one of its most popular titles when work comedy “The Office” moved to Comcast Corp (CMCSA.O) streaming service Peacock.
Netflix also increased monthly rates in the UK, Germany, Argentina and Japan during the quarter.
The total number of new customers was 1.8 million in Europe, 1.36 million in Asia and 360,000 in Latin America.
“What was not expected was the strength of the slowdown in international markets, where competition is significantly lower,” said eMarketer analyst Eric Haggstrom.
Excluding items, the company earned $ 3.75 per share in the first quarter, beating analyst estimates of $ 2.97 per share.
Revenue increased from $ 5.77 billion in the quarter to $ 7.16 billion, which is lower than previous estimates of $ 7.13 billion.
Net income rose to $ 1.71 billion, or $ 3.75 a share, from $ 709 million, or $ 1.57 a share, a year earlier.
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