Netflix stock plunges as subscriber growth worries deepen

SAN RAMON, Calif. (AP) — Netflix delivered its newest quarter of disappointing subscriber development through the last three months of final yr, a pattern that administration foresees persevering with into the brand new yr as harder competitors is undercutting the video streaming chief.

The Los Gatos, California, firm added 8.3 million worldwide subscribers through the October-December interval, about 200,000 fewer than administration had forecast. Apart from releasing its fourth-quarter outcomes Thursday, Netflix additionally projected a rise of two.5 million subscribers through the first three months of this yr, effectively under analysts’ expectations for a achieve of 4 million, in line with FactSet Analysis.

The disappointing information precipitated Netflix’s inventory value to plunge by about 19% in prolonged buying and selling after the numbers got here out, deepening a steep decline through the previous two months.

It capped a difficult yr for Netflix after it reveled in eye-popping good points through the pandemic lockdowns of 2020 that drove homebound individuals to its service.

Netflix picked up 18.2 million worldwide subscribers throughout 2021, its slowest tempo of annual development in 5 years. It got here after Netflix gained greater than 36 million subscribers throughout 2020. The service now boasts almost 222 million worldwide subscribers worldwide, greater than different video streaming chief.

However different companies backed by deep-pocketed rivals resembling Walt Disney Co. and Apple have been making inroads in recent times and a bevy of different networks are also wading into video streaming in an try and seize eyeballs and a chunk of family budgets. The escalating competitors is one motive Netflix determined to increase into video video games final yr.

Whereas acknowledging the competitors is having a “marginal“ results on its development in i ts quarterly shareholder letter, Netflix emphasised its service remains to be thriving in each nation the place it’s accessible.

The corporate is also faring effectively financially, whilst its subscriber development tapers off. Netflix earned $607 million, or $1.33 per share, within the fourth quarter, a 12% enhance from the identical time within the prior yr. Fourth-quarter income rose by 16% to $7.7 billion.

Buyers, although, are getting extra frightened that Netflix could also be nearing its peak in recognition. These issues have precipitated Netflix’s inventory value to plummet by greater than 30% from its peak of roughly $700 reached in mid-November.

The alternatives for future development have turn out to be notably powerful in Netflix’s largest market -- the U.S. and Canada -- the place it’s beginning to seem that almost all households occupied with subscribing to the service have already got an account. Netflix ended 2021 with 75.2 million subscribers within the U.S. and Canada, translating right into a paltry one-year achieve of 1.3 million subscribers in that area.

Final week, Netflix raised its value by roughly 10% throughout the U.S. and Canada -- a transfer that would trigger some subscribers to cancel the service, based mostly on the corporate’s previous historical past with earlier value hikes.

On the upside, Netflix on Friday will unveil the fourth season of “Ozark,” one in every of its hottest collection and a possible magnet for brand new subscribers.