Netflix Shares Plunge as Subscribers Slow Down

Video-streaming giant Netflix report a plunge in shares as growth of subscribers slow down. The boost from the pandemic is over.

Between January and March this year, about 3.98 million people signed up for Netflix. This number falls well short of the predicted 6 million. The company believe part of the reason for the shortfall may be a lack of new programs. Although they expect this to recover as they release sequels to hit shows.

$25bn was wiped off the company’s market capitalisation as Netflix shares fell 11% in after-hours trading.

The streaming service benefited last year from Covid forcing people all over the world to stay at home. During this time they added 15.8 million new subscribers. Most of the growth was in Asia, where Netflix added 9.3 million new subscribers last year. This was an increase of about 65% more than in 2019.

A double-edged sword

But it’s not all good news. The pandemic caused issues and disruptions to production, resulting in less content for the first half of 2021. This in turn has led to slower membership growth. The company now project continued poor growth for the coming months. An additional 1 million new streaming customers is expected in the second quarter, which is much less than the previously predicted 5 million.

Netflix is also facing increasing competition from other streaming services in the market. New streaming service Disney+, which only launched just over a year ago, already has 100 million subscribers. In comparison, the longer running Netflix has 207.6 million.

However, even though customer growth is slow, Netflix still reports revenues of $7.16bn and net income of $1.71bn.

The company predict stronger growth to follow in the second half of the year when it releases new seasons of a number of its hit shows and plus some new titles.

Netflix chief executive Reed Hastings says, “we had those ten years where we were growing smooth as silk … It is just a little wobbly right now.”

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