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Netflix stock plunges as subscriber growth worries deepen

SAN RAMON, CALIFORNIA (AP) – Netflix delivered its latest quarter of disappointing subscriber growth during the final three months of last year, a trend that management foresees continuing into the new year as tougher competition is undercutting the video streaming leader.

The Los Gatos, California, company added 8.3 million worldwide subscribers during the October-December period, about 200,000 fewer than management had forecast. Besides releasing its fourth-quarter results on Thursday, Netflix also projected an increase of 2.5 million subscribers during the first three months of this year, well below analysts’ expectations for a gain of four million, according to FactSet Research.

The disappointing news caused Netflix’s stock price to plunge by about 20 per cent in extended trading after the numbers came out, deepening a steep decline during the past two months.

It capped a challenging year for Netflix after it revelled in eye-popping gains during the pandemic lockdowns of 2020 that drove homebound people to its service.

Netflix picked up 18.2 million worldwide subscribers during 2021, its slowest pace of annual growth in five years. It came after Netflix gained more than 36 million subscribers during 2020. The service now boasts nearly 222 million worldwide subscribers, more than other video streaming leader.

The company logo and view of Netflix headquarters in Los Gatos, California. PHOTO: AP

But other services backed by deep-pocketed rivals such as Walt Disney Co and Apple have been making inroads in recent years, and a bevy of other networks also are wading into video streaming in an attempt to grab eyeballs and a piece of household budgets. The escalating competition is one reason Netflix decided to expand into video games last year.

“The 2022 backdrop for Netflix seems to have been set with a theme of competition abound,” said Third Bridge analyst Joe McCormack.

While acknowledging the competition is having a “marginal” effects on its growth in its quarterly shareholder letter, Netflix emphasised its service is still thriving in every country where it’s available.

In a Thursday conference call, Netflix executives also said uncertainty caused by the ebb and flow of the pandemic during the past year has made it more difficult to gauge future growth.

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