New York, Apr 20 (EFE).- Netflix’s share price was down a whopping 36 percent in early trading Wednesday on the Nasdaq, as investors responded to an earnings report showing the company lost subscribers for the first time in more than a decade.
The price of Netflix’s shares had fallen to $223.35 a half hour after the opening bell, down by $125.26 from a per-share price of $348.61 at Tuesday’s close.
The subscription-based streaming video giant lost 200,000 subscribers between January and March 2022 relative to the first quarter of 2021, its first subscriber loss since the third quarter of 2011 and a far cry from its forecast for a quarterly gain of 2.5 million subscribers.
It also is forecasting a loss of 2 million subscribers in the second quarter, compared with a gain of 1.54 million subscribers in April-June 2021.
Netflix reported net income of just under $1.6 billion in Tuesday’s earnings report, down from $1.7 billion in the first quarter of 2021.
In a letter to shareholders on Tuesday, the company attributed the disappointing quarter to “revenue headwinds,” saying its results were hurt by “relatively high household penetration – when including the large number of households sharing accounts – combined with competition” among streaming service providers.
“The big Covid boost to streaming obscured the picture until recently,” Netflix added.
The company, which has 221.54 million subscribers worldwide, said in the letter that a key focus going forward will be on how to “monetize sharing,” a reference to the more than 100 million households using another household’s account.
In that regard, co-CEO Reed Hastings said during an earnings call that Netflix is planning to introduce lower-priced, ad-funded subscription plans, a move it has long resisted.
“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” Hastings said on the call.
“But as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense.”
Wall Street analysts say Netflix may suffer its worst trading day in more than a decade on Wednesday and that the unexpected subscriber loss could mark the end of the boom in demand it enjoyed during the Covid-19 triggered lockdowns.
Other companies that offer subscription-based digital entertainment also were down in morning trading on Wall Street, with Disney off more than 4 percent, Amazon.com down more than 2 percent and Spotify over 7 percent lower. EFE