The streaming service added just 3.98 million subscribers in the first quarter, falling short of Wall Street’s estimate of 6.29 million.
Easing pandemic lockdowns is taking a much heavier toll on Netflix Inc.’s growth. than expected, causing its shares to plummet by a whopping 13% on Tuesday.
The streaming service only added 3.98 million subscribers in the first quarter, missing Wall Street’s estimate of 6.29 million and its own forecast of 6 million. The current quarter will get even more challenging, with Netflix predicting 1 million new customers – a fraction of the 4.44 million analysts predict.
Netflix has been warning for months that growth would slow after customers emerged from Covid’s hibernation, but few expected it to stall so dramatically. The first quarter of 2020 was the strongest in the company’s history, with 15.8 million new customers, and Netflix’s pace was still surprisingly high in the fourth quarter.
In contrast, the last three months were the slowest first quarter since 2013, when Netflix added about 3 million customers.
A lack of new shows can also contribute to the slump. The company’s production slowed in the first quarter due to the effects of the pandemic, leading to production delays. Netflix was able to maintain its release schedule for the first few months of Covid lockdowns as it had already completed many shows. But films and programs scheduled to be in production in March, April and May had to stop, leading to the current shortage.
All of that coincided with an intensification of streaming competition from Disney +, HBO Max and Apple TV + to newer entrants such as Discovery + and Paramount +. Some are less expensive than Netflix, which boosted US prices in October.
Europe remains a bright spot for Netflix. The streaming service served 1.81 million customers in Europe, the Middle East and Africa and led the company. ‘Lupine’, a French thriller about robberies, was the service’s hottest new series in the quarter.
Netflix fell as low as $ 480 in long-term trading, which would be a 2021 low. The stock was up 1.6% this year through the closing Tuesday in New York.