Netflix Inc said slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter, and shares of the world’s largest streaming service fell 11 percent on Tuesday.
Around 3.98 million people signed up for Netflix from January through March, which is below the average forecast of 6.25 million analysts surveyed by Refinitiv.
Netflix estimates that it will only add 1 million new streaming customers in the second quarter. Analysts had expected a forecast of nearly 4.8 million.
Netflix’s shares fell 11 percent in after-hours trading to $ 489.28, reducing the company’s market cap by $ 25 billion. The stock is up 27 percent in the past 12 months, compared to a 63 percent increase in the tech-heavy Nasdaq Composite Index.
Netflix said it doesn’t think competition changed significantly or affected new registrations during the quarter “as the over-forecast was in all of our regions.”
The company predicted membership growth would accelerate in the second half of the year as new seasons of “You,” “Money Heist,” and “The Witcher” and the action movie “Red Notice” were released.
A year ago, Netflix had a record 15.8 million customers when the pandemic forced people around the world to stay home. The company said Tuesday the pandemic had hampered the filming of new shows.
“These dynamics also contribute to lighter content in the first half of 2021, and so we believe membership growth is slower,” the company said in its quarterly letter to shareholders.
Analysts believe people will spend less time streaming from their living rooms as COVID-19 vaccinations spread and more people emerge from their homes.
Rival media companies have made streaming their priority, spending billions to compete with Netflix. Disney + by Walt Disney Co reached 100 million subscribers in March. Netflix’s total number of streaming customers at the end of March was 207.6 million.
Netflix’s share of new US subscribers fell to 8.5% in the quarter, down from 16.2% in the same period last year, according to Kantar Media.
During the quarter, Netflix lost one of its most popular titles when workplace comedy “The Office” switched to Comcast Corp streaming service Peacock.
Netflix also increased its monthly rates in the UK, Germany, Argentina and Japan during the quarter.
New customers were 1.8 million in Europe, 1.36 million in Asia and 360,000 in Latin America.
“What wasn’t expected was the strength of the slowdown in international markets, where competition is significantly less,” said Eric Haggstrom, an analyst at eMarketer.
Excluding items, the company earned $ 3.75 per share in the first quarter, beating analysts’ estimates of $ 2.97 per share.
Revenue rose to $ 7.16 billion from $ 5.77 billion in the quarter, above estimates of $ 7.13 billion.
Net income rose from $ 709 million, or $ 1.57 per share last year, to $ 1.71 billion, or $ 3.75 per share.
