Drop stems partly from company’s decision to suspend service in Russia to protest war in Ukraine, but deeper problems exist.
Netflix shares plunged after the streaming service suffered its first subscriber loss in more than a decade. The company’s customer base fell by 200,000 subscribers during the January-March period, the company disclosed Tuesday in releasing its latest earnings report. Netflix’s stock price fell more than 27% to $252.90 before the start of trading on Wednesday as investors fretted about the company’s slowing growth and mounting competition. The decline in subscribers is the first since Netflix became available throughout most of the world outside of China six years ago. The drop this year stemmed in part from to protest the, resulting in a loss of 700,000 subscribers. Even so, Netflix acknowledged its problems are deep-rooted by projecting a loss of another 2 million subscribers during the April-June period. The company reported revenue of nearly $7.9 billion in the period, falling slightly short of Wall Street forecasts. For the current quarter ending in July, Netflix said it expects revenue of just over $8 billion. Analysts surveyed by Zacks had expected revenue of $8.2 billion. If the stock drop extends into Wednesday’s regular trading session, Netflix shares will have lost more than half of their value so far this year — wiping out about $150 billion in shareholder wealth in less than four months. Netflix also lost 800,000 subscribers in 2011 after it unveiled plans to begin charging separately for its then-nascent streaming service, which had been bundled for free with its traditional DVD-by-mail service. The customer backlash to that move elicited an apology from Netflix CEO Reed Hastings for botching the execution of the spin-off. The service also saw a decline in U.S. subscribers in 2019. But the latest subscriber loss was far worse than a forecast by Netflix management for a conservative gain of 2.
