Netflix Inc. (NFLX.O) said the slower production of TV shows and movies during the pandemic hurt subscriber growth in the first quarter, and shares in the world’s largest streaming service fell 11% on Tuesday.
About 3.98 million people reported to Netflix from January to March, less than the average projection of 6.25 million polled by Refinitiv.
Netflix estimates it will add just 1 million new streaming customers in the second quarter. Analysts had expected a forecast of nearly 4.8 million.
Shares of Netflix fell 11% in after-hours trading to $ 489.28. Its share has risen 27% over the past twelve months, compared to a 63% increase in the Nasdaq Composite Index (.IXIC).
According to the company, growth will accelerate in the second half of the year when it launches new seasons of “You”, “Money Heist” and “The Witcher” and the action film “Red Notice”.
A year ago, Netflix reached a record 15.8 million customers when the pandemic forced people to stay home. The company said Tuesday the pandemic is preventing the filming of new shows.
“These dynamics are also contributing to a lighter content ladder in the first half of 2021, which is why we believe a slower growth in membership,” the company said in its quarterly letter to shareholders.
Analysts believe that people will spend less time in their living rooms as COVID-19 vaccines spread and more people come out of their homes.
Competitive media companies have declared their priority and are spending billions to compete with Netflix. Walt Disney Co. (DIS.N)’s Disney + crossed 100 million subscribers in March. Netflix’s total streaming customers stood at 207.6 million at the end of March.
Netflix said it does not believe that competition in the quarter changed significantly or had an effect on the new listings, as the forecast was in all our regions. ‘
But Netflix’s share of new U.S. subscribers fell to 8.5% during the quarter, from 16.2% in the same period a year ago, according to Kantar Media.
During the quarter, Netflix lost one of its most popular titles when the comedy The Office moved from the workplace to the streaming service Peacock of Comcast Corp (CMCSA.O).
Netflix also increased its monthly rates in Britain, Germany, Argentina and Japan during the quarter.
New customers total 1.8 million in Europe, 1.36 million in Asia and 360,000 in Latin America.
“What was not expected was the strength of the slowdown in international markets, where competition is significantly lower,” said Eric Haggstrom, eMarketer analyst.
Excluding items, the company earned $ 3.75 per share in the first quarter, beating the analysis’s estimates of $ 2.97 per share.
Revenue rose to $ 7.16 billion, compared to $ 5.77 billion during the quarter, with a higher estimate of $ 7.13 billion.
Net income a year earlier had risen to $ 1.71 billion, or $ 3.75 per share, from $ 709 million, or $ 1.57 per share.
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