Netflix shares crater 23% after company reports it lost subscribers for the first time in more than 10 years

Reed Hastings, co-CEO of Netflix, participates in the Milken Institute Global Conference on October 18, 2021 in Beverly Hills, California.

Patrick T. Fallon | AFP | Getty Images

Shares of Netflix cratered more than 23% on Tuesday after the company reported a loss of 200,000 subscribers during the first quarter. It’s the first time the streamer has reported a subscriber loss in more than a decade.

The company also said it expects the losses to continue, forecasting a global paid subscriber loss of 2 million for the second quarter.

Here are the key numbers:

  • EPS: $3.53 vs $2.89, according to a Refinitiv survey of analysts.
  • Revenue: $7.78 billion vs $7.93 billion, according to a Refinitiv survey of analysts.
  • Global paid net subscriber additions: A loss of 200,000 compared with 2.73 million adds expected, according to StreetAccount estimates.

Netflix previously told shareholders it expected to add 2.5 million net subscribers during the first quarter. Analysts had predicted that number would be closer to 2.7 million. During the same period a year ago, Netflix added 3.98 million paid users.

The company said that the suspension of its service in Russia and the winding-down of all Russian paid memberships resulted in a loss of 700,000 subscribers. Excluding that impact, the company said it would have seen 500,000 net additions during the most recent quarter.

Additionally, Netflix blamed growing competition from traditional entertainment companies that have launched streaming services, as well as password sharing for recent stagnant growth in paid subscriptions.

“Our revenue growth has slowed considerably … Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally,” the company wrote in a letter to shareholders Tuesday. “However, our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds.”

The company estimates that in addition to its 222 million paying households, that the service is being shared with more than 100 million additional households through account sharing.

Netflix has increased its content spend, particularly on originals, amid intense competition in the streaming space. To pay for it, it’s hiked prices of its service. While the company is exploring other options for growth, like adding video games, analysts and investors are wondering what else Netflix can do to bolster revenue.

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