Netflix Inc. said it expects to add a much smaller number of subscribers this quarter than it did a year ago as it adjusts to growing competition and lasting disruptions from the coronavirus pandemic, sending the video streamer’s shares down sharply.
The company on Thursday forecast an increase of 2.5 million subscribers in the current quarter, compared with four million a year earlier. It also slightly missed its subscriber estimate for the fourth quarter, adding 8.3 million subscribers instead of the projected 8.5 million.
Netflix Inc dashed hopes for a quick rebound after forecasting weak first-quarter subscriber growth on Thursday, sending shares sinking nearly 20% and wiping away most of its remaining pandemic-fueled gains from 2020.
The world’s largest streaming service projected it would add 2.5 million customers from January through March, less than half of the 5.9 million analysts had forecast, according to
Netflix tempered its growth expectations, citing the late arrival of anticipated content, such as the second season of “Bridgerton” and the Ryan Reynolds time-travel movie “The Adam Project.”
Shares of Netflix plummeted nearly 20% to $408.13 in after-hours trading. Competitor Walt Disney Co (DIS.N), which has staked its future on building a strong streaming business, saw its shares sink 4%. Streaming device Roku Inc (ROKU.O) fell 5%.
In a letter to shareholders, Netflix said it believed the ongoing COVID-19 pandemic and economic hardships in several parts of the world like Latin America may have kept subscriber growth from rebounding to levels seen before the pandemic.
COVID “created a lot of bumpiness” that made it hard to project subscriber numbers, “but all the fundamentals of the business are pretty solid,” Co-Chief Executive Ted Sarandos said in a post-earnings video interview.
The company posted adjusted earnings per share of $1.33, crushing analyst consensus estimates of 82 cents. Revenue hit $7.71 billion, in line with estimates.
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