Some $25 billion off Netflix’s market capitalization was wiped out as the slower production of TV shows and movies during the pandemic hit subscriber growth in the first quarter
Its shares were down 11% in after-hours trading, falling to $489.28 on April 20
From January through March, some 3.98 million people signed up for Netflix, below analysts’ 6.25 million average projection
LOS GATOS, California: Netflix shares were down 11% in after-hours trading, falling to $489.28 on April 20, wiping $25 billion off the company’s market capitalization as the slower production of TV shows and movies during the pandemic hit subscriber growth in the first quarter.
From January through March, some 3.98 million people signed up for Netflix, which was below the 6.25 million average projection of analysts.
The world’s largest streaming service estimated it will add just 1 million new streaming customers in the second quarter, contrary to analysts’ predictions of nearly 4.8 million.
However, the company believed membership growth would improve in the second half of the year when it releases new seasons of “You,” “Money Heist,” and “The Witcher”, along with action movie “Red Notice,” among other titles.
One year ago, when the pandemic forced people around the world to stay home, Netflix added a record 15.8 million customers. The company noted on Tuesday that the pandemic slowed the filming of new shows.
“These dynamics are also contributing to a lighter content slate in the first half of 2021, and hence we believe slower membership growth,” the company said in its quarterly letter to shareholders.
As the COVID-19 vaccination expands and more people step out, analysts project people will spend less time streaming from their living rooms.
Declaring streaming their priority, rival companies are spending billions to compete with Netflix. Walt Disney Co’s Disney+ crossed 100 million subscribers in March, while Netflix’s total streaming customers stood at 207.6 million at the end of March.
Netflix said it did not believe competition changed materially in the quarter or impacted its new sign-ups “as the over-forecast was across all of our regions.”
Netflix’s share of new U.S. subscribers fell to 8.5% during the quarter, down from 16.2% 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” moved to Comcast Corp streaming service Peacock. It also raised its monthly rates in Britain, Germany, Argentina and Japan during the quarter.
New customers totaled 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 lower,” said analyst Eric Haggstrom.
Excluding items, Netflix earned $3.75 per share in the first quarter, beating analyst estimates of $2.97 per share.
Revenue rose to $7.16 billion from $5.77 billion during the quarter, edging past estimates of $7.13 billion.
Net income rose to $1.71 billion, or $3.75 per share, from $709 million, or $1.57 per share last year.
