For the first time in a decade, Netflix reported a subscriber loss. Shares of the popular streaming service tumbled more than 25 percent after the reported loss during the first quarter, CNBC reports.
Netflix reported a loss of 200,000 subscribers, blaming increased competition, password sharing, inflation, and the ongoing Russian invasion of Ukraine.
The company warned of deepening trouble ahead.
It is not the only streaming site to tumble in stocks. Roku, Spotify, and Disney also tumbled in the after-hours market following Netflix’s brutal update in the stocks.
Netflix forecasts a global paid subscriber loss of 2 million for its second quarter this year.
The last time the site lost subscribers was in October 2011.
It is a twist to shareholders because the company expected to gain 2.5 million subscribers this past quarter, not lose 200,000.
In a letter to shareholders Tuesday, Netflix said that the revenue growth had slowed considerably. It blamed larger numbers of households sharing accounts with an increase in competition in the creation of its revenue loss.
When Covid began, Netflix was an early winner. Lockdowns sent families inside and in need of entertainment. But now, the pandemic-era gains “clouded the picture” for the company, and there has been a downturn while people return to a more “normal” lifestyle including activities outside of their homes.
In order to gain shares in the market, Netflix has increased spending on its content and its original series and movies. This required a hike in prices for service. The prices may help with revenue, but they also hurt the company, as it meant about 600,000 subscribers left the service in the U.S. and Canada. The company also said that pulling out of Russia cost the company 700,000 subscribers.
Netflix has warned of a crackdown ahead for password sharing. Also in the works is a rumored cheaper, ad-supported version for those who do not want to pay for a full subscription.
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