Netflix shares nosedived more than 25% in after-hours trading after the company disclosed its first loss of subscribers in more than a decade. The company said factors including the war in Ukraine caused it to lose 200,000 subscribers worldwide in the first quarter of 2022, when it had expected to gain more than 2 million subscribers, reports Reuters. The number of subscribers in the US dipped briefly in 2019, before the pandemic led to huge growth for streaming services, but this is the company's first worldwide net loss of customers since late 2011. With Tuesday's drop, the firm has lost nearly half its value this year.
The company said pulling out of Russia had cost it 700,000 subscribers and around 600,000 people in the US and Canada ditched the service after it raised prices earlier this year, the BBC reports. "Our relatively high household penetration—when including the large number of households sharing accounts—combined with competition, is creating revenue growth headwinds," the company said, predicting that it could lose another 2 million subscribers between April and June this year out of around 221 million worldwide.
Co-CEO Reed Hastings said Tuesday that the company plans to look for ways to get revenue from some of the estimated 100 million households worldwide who use the Netflix accounts of relatives or friends. Hastings said Netflix also plans to introduce an advertising supported subscription tier, as rivals including Disney+ and HBO Max have done. The company noted that despite increased competition, its share of viewing time in the US has held steady, Reuters reports. Shares of other streaming-related stocks, including Disney, also fell in after-hours trading after Netflix released its results. (More Netflix stories.)
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