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Netflix Tanks 10% After Subscriber Growth Slows Down

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Shares of Netflix Inc. (NFLX) tanked 10% in extended trading session on Tuesday after the online-video streaming giant's first-quarter subscriber additions fell short of expectations.

Netflix added 3.98 million subscribers globally in the quarter, far below its forecast of 6.00 million, to end the quarter with 207.64 million subscribers. The company added 0.45 million customers in the U.S. and Canada region during the quarter, while EMEA region subscriber additions were 1.81 million, LATAM were 0.36 million and APAC were 1.36 million.

"We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays. We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup," Netflix said in a letter to investors.

For the second quarter, the company expects to add 1.00 million subscribers.

Los Gatos, California-based Netflix's first-quarter profit rose to $1.71 million or $3.75 per share from $709 million or $1.57 per share last year. On average, 35 analysts polled by Thomson Reuters expected earnings of $2.97 per share for the quarter.

Netflix's revenues for the quarter rose 24.2% to $7.16 billion from $5.77 billion last year. Analysts had a consensus revenue estimate of $7.13 billion for the quarter.

The video-streaming service provider said average revenue per membership rose 6% year over year.

Looking forward to the second quarter, Netflix expects revenues of $7.30 billion and earnings of $3.16 per share. Analysts polled by Thomson Reuters currently expect earnings of $2.68 per share and revenues of $7.39 billion.

NFLX closed Tuesday's trading at $549.57, down $4.87 or 0.88%, on the Nasdaq. The stock further dropped $56.28 or 10.24%, in the after-hours trading.

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