Netflix Inc. (NFLX.O) said slower production of TV shows and movies during the pandemic affected subscriber growth in the first quarter, sending shares of the world’s largest streaming service 11% on Tuesday.
About 3.98 million people subscribed to Netflix from January to March, below the average projection of 6.25 million of analysts surveyed by Refinitiv.
Netflix estimates it will add just 1 million new streaming customers in the second quarter. Analysts had expected a forecast of almost 4.8 million.
Netflix shares fell 11% in after-hours trading to $ 489.28. Its stock has risen 27% in the last 12 months, compared to a 63% increase in the Nasdaq Composite Index (.IXIC).
The company expects the growth in membership to accelerate in the second half of the year, when it will release new seasons of “You”, “Money Heist” and “The Witcher” and the action film “Red Notice”, among other titles.
A year ago, Netflix added a record 15.8 million customers because the pandemic forced people around the world to stay home. The company said on Tuesday that the pandemic prevented the filming of new shows.
“These dynamics also contribute to a lighter content list in the first half of 2021, and we therefore believe in a slower growth in membership,” the company said in a quarterly letter to shareholders.
Analysts predict that people will spend less time flowing from their living rooms as COVID-19 vaccinations spread and more people leave their homes.
Rival media companies have declared streaming a priority and are spending billions to compete with Netflix. Walt Disney Co. (DIS.N) Disney + crossed 100 million subscribers in March. Netflix streaming customers reached 207.6 million at the end of March.
Netflix said it did not believe competition had changed significantly in that quarter and had no impact on its new registrations “because the forecasts were excessive in all our regions”.
But Netflix’s share of new US subscribers fell to 8.5 percent in the quarter, down from 16.2 percent in the same period last year, according to Kantar Media.
During the quarter, Netflix lost one of its most popular titles when the workplace comedy “The Office” moved to Comcast Corp (CMCSA.O) streaming service Peacock.
Netflix increased its monthly rates in the UK, Germany, Argentina and Japan in that quarter.
New customers totaled 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, surpassing analysts’ estimates of $ 2.97 per share.
Revenue rose to $ 7.16 billion from $ 5.77 billion in the quarter, exceeding previous 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, a year earlier.
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