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Netflix Shares Tank 20% As Subscriber Growth Slows Down

netflix jan20 lt

Shares of Netflix Inc. (NFLX) tanked nearly 20% in extended hours on Thursday after the online-video streaming giant reported fourth-quarter results, with earnings beating Street view, however, subscriber growth was below expectations.

Netflix added 8.28 million subscribers globally in the quarter, below its own forecast of 8.50 million, to end the quarter with 221.84 million subscribers. The company added 1.19 million customers in the U.S. and Canada region during the quarter, while EMEA region subscriber additions were 3.54 million, LATAM were up 0.97 million and APAC rose 2.58 million.

Looking ahead, the company expects to add 2.50 million subscribers in the first quarter of 2022. The company blamed increased competition from other streaming companies for the slowdown of subscriber additions.

"Consumers have always had many choices when it comes to their entertainment time - competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering," Netflix said. "While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched."

Netflix recently announced price increases in the U.S. and Canada. In the US, the monthly cost for the basic plan rose by $1 to $9.99, while monthly standard plan rose from $13.99 to $15.49 and the premium plan rose from $17.99 to $19.99. This makes its regular subscription more expensive than its rivals.

Los Gatos, California-based Netflix's fourth-quarter profit rose to $607 million or $1.33 per share from $542 million or $1.19 per share last year. On average, 37 analysts polled by Thomson Reuters expected earnings of $0.82 per share for the quarter.

Netflix's revenues for the quarter rose 16% to $7.71 billion from $6.64 billion last year. Analysts had a consensus revenue estimate of $7.71 billion for the quarter.

Revenue growth was driven by an 9% increase in average paid streaming memberships and 7% growth in average revenue per membership.

Looking forward to the first quarter, Netflix expects revenues of $7.90 billion and earnings of $2.86 per share. Analysts currently expect earnings of $3.45 per share and revenues of $8.08 billion.

NFLX closed Thursday's trading at $508.25, down $7.61 or 1.48%, on the Nasdaq. The stock further slipped $91.78 or 18.06% in the after-hours trading.

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