Netflix shares have taken a hit of almost 25% in after-hours trading after it was reported the streaming giant lost 200,000 subscribers globally in the first quarter of this year – falling to 221.64 million users.
Revealed as part of the company’s first-quarter 2022 earnings release Tuesday, they also indicated they expect to lose another 2 million in the current second-quarter. These mark the first time they have experienced a quarter of subscriber losses in a decade.
Wall Street analysts expected Netflix to add 2.8 million new subscribers worldwide in its first quarter, even internal projections were targeting 2.5 million subscriber additions, so the fact it lost subscribers has sent a chill down investors’ spines.
Netflix also reported $7.868 billion in Q1 revenue, up less than 10% from a year ago. In its letter to shareholders, the slowing of revenue growth is being ascribed to increased competition and its relative high household penetration which includes sharing accounts.
Recently it has been testing a surcharge for sharing passwords in three Latin American countries as a likely prelude to a global effort to crack down on the practice with Netflix estimating more than 100 million global households currently use another household’s account – more than 30 million of which are in North America.
Sources: The Wall Street Journal, THR
