Netflix Shares Sink as Company Sees Subscriber Growth Slowing
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 stock fell 20% in after-hours trading, while shares of its main streaming rival,
Walt Disney Co.
, were down 3.4%.
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Netflix’s subscriber miss came despite a strong content lineup of movies and TV shows in the quarter including new seasons of “The Witcher” and “You.” New movies that performed well included the political satire “Don’t Look Up,” which recently broke the company’s record for weekly viewership.
In its letter to shareholders, Netflix said its subscriber growth rates have “not yet reaccelerated to pre-Covid levels.” The company said among the reasons for that is an “ongoing Covid overhang” and economic difficulties in several parts of the world including Latin America.
“Covid has introduced so much noise,” said Netflix Chairman and Co-Chief Executive Reed Hastings during the company’s video call to review its results. He played down the near miss in subscriber growth, while Ted Sarandos, co-CEO and content head, said the company didn’t see any reductions to its engagement or subscriber retention.
“All the fundamentals are pretty solid,” Mr. Sarandos said.
Still, the results aren’t what Mr. Hastings was expecting last October when he predicted a big end-of-the-year finish for the company because of the return of hit shows and new movies including the action film “Red Notice.”
“We have so much content coming in Q4 like we’ve never had,” Mr. Hastings told analysts at the time.
The lower subscriber projections for the first quarter come despite the scheduled return in March of “Bridgerton,” one of its biggest hits, and “The Adam Project,” a much anticipated time-travel-themed movie starring Ryan Reynolds and Jennifer Garner.
Additional competition also may be a factor, the company said. In the past, Netflix has tended to play down the competition it is facing from newer streaming platforms including Disney’s Disney+ and
AT&T Inc.’s
HBO Max.
…
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