Netflix Inc (NFLX.O) said that slower production of TV shows and movies during the pandemic affected subscriber growth in the first quarter, causing shares of the world’s largest streaming service to fall by one. 11% on Tuesday.
Roughly 3.98 million people signed up for Netflix from January to March, below the average projection of 6.25 million from analysts surveyed by Refinitiv.
Netflix estimated that it will add just 1 million new streaming customers in the second quarter. Analysts had expected a forecast of almost 4.8 million.
Netflix shares plunged 11% in after-hours trading to $ 489.28. Its shares are up 27% over the past 12 months compared to a 63% rise in the high-tech Nasdaq Composite Index (.IXIC).
The company projected that membership growth would accelerate in the second half of the year when it releases new seasons of “You,” “Money Heist,” and “The Witcher,” and the action movie “Red Notice,” among other titles.
A year ago, Netflix added a record 15.8 million customers when the pandemic forced people around the world to stay home. The company said Tuesday that the pandemic hampered filming of new shows.
“This dynamic is also contributing to a lighter content slate in the first half of 2021 and therefore we believe that membership growth will be slower,” the company said in its quarterly letter to shareholders.
Analysts project that people will spend less time broadcasting from their living rooms as COVID-19 vaccines spread and more people emerge from their homes.
Rival media companies have stated that streaming is their priority and are spending billions to compete with Netflix. Walt Disney Co’s Disney + (DIS.N) surpassed 100 million subscribers in March. Total Netflix streaming customers stood at 207.6 million at the end of March.
Netflix said it does not believe the competition has materially changed in the quarter or affected its new registrations “as the exaggerated forecast was in all of our regions.”
But the share of new US Netflix subscribers fell to 8.5% during the quarter, down 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 workplace comedy “The Office” moved to Comcast Corp’s (CMCSA.O) streaming service Peacock.
Netflix also raised its monthly rates in Britain, Germany, Argentina and Japan during the quarter.
New clients totaled 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 less,” said eMarketer analyst Eric Haggstrom.
Excluding items, the company earned $ 3.75 per share in the first quarter, beating analyst estimates of $ 2.97 per share.
Revenue increased to $ 7.16 billion from $ 5.77 billion during the quarter, topping previous estimates of $ 7.13 billion.
Net income increased to $ 1.71 billion, or $ 3.75 per share, from $ 709 million, or $ 1.57 per share, a year earlier.
Our Standards: The Thomson Reuters Trust Principles.