Netflix have reported a drop in subscriber growth for the first quarter of this year, sending shares of the streaming service down 11% last night.
Roughly 3.98 million people signed up to Netflix between January and March this year. This falls below the 6.25 million average projection of analysts surveyed by Refinitiv.
Netflix also estimated that they will add just 1 million new customers between now and June.
Despite this, its stock has seen a 27% increase in the last 12 months, compared with a 63% increase in the tech-heavy Nasdaq Composite Index.
A year ago, Netflix added a record 15.8 million customers, with people being forced to stay at home during lockdown.
“Over-forecast was across all of our regions”
Netflix do not believe that competition changed materially in the last three months. They also said that it did not impact its new sign ups “as the over-forecast was across all of our regions”.
The pandemic has also worked against Netflix, as they said that restrictions have led to a decrease in new films and shows being shot.
In their Quarterly letter to shareholders Netflix said, “These dynamics are also contributing to a lighter content slate in the first half of 2021, and hence, we believe slower membership growth”.
Analysts also stated that with more people getting vaccinated and restrictions easing worldwide, people will spend less time streaming in the future.
It was also reported that Netflix lost one of its popular shows “The Office” to Comcast streaming service Peacock.
Netflix’s share of new US subscribers also dipped from 16.8% to 8.5% in the last year, according to Kantar Media.
The streaming service also raised their monthly rates in Britain, Germany, Japan and Argentina.
eMarketer Eric Haggstrom said this, “What wasn’t expected was the strength of the slowdown in international markets, where competition is significantly lower”.
Last month, Netflix also announced plans to test a feature which could lead to a crackdown on password sharing. More on that report from Nova here.
Some growth in the first quarter for Netflix
Despite the decreases in subscription growth, revenue did rise from 5.77 billion to 7.16 billion in the first quarter. This also beat the analysts’ estimate of $7.13 billion.
Netflix did earn $3.75 per share in the first quarter of 2021. This surpassed the analysts’ estimate of $2.97.
Net income jumped from $709 million to $1.71 billion over the last year.