Netflix shares dip in extended hours after losing paid subscribers
Netflix is once again in deep trouble after losing streaming subscribers for the first time in more than a decade. The video-streaming giant announced weak financial results for the first quarter on Tuesday, sending its shares down more than 25 percent in the extended hours.
Investors seemed particularly disappointed with the subscribers’ numbers for the quarter. Netflix Inc. (NFLX) reported that it lost 200,000 paid subscribers during the three months ended March 31, marking the first decline in paid users since 2011.
The results were also contrary to the expectations of analysts, who were looking for net additions of 2.7 million during the quarter. In comparison, Netflix had added 3.98 million paid subscribers during the same period of 2021.
Some industry experts blamed the price hikes in the U.S. and Canada, where Netflix lost about 640,000 subscribers. In addition, the suspension of Netflix’s service in Russia also resulted in a loss of 700,000 subscribers. Moreover, the company is also facing intense competition from rival streaming services, another reason behind the latest drop in subscribers.
Overall, Netflix reported a profit of $3.53 per share for the first quarter, compared to $3.75 per share in the linked quarter of 2021. Analysts were looking for a profit of $2.90 per share. Total sales increased to $7.87 billion versus $7.16 billion in the year-ago period. However, sales fell short of analysts’ average estimate of $7.93 billion.
Weak Outlook
To make things worse for investors, Netflix issued a disappointing outlook for the second quarter. The company expects to lose two million paid subscribers in the current quarter, contrary to the consensus estimate for net additions of 2.55 million.
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