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Netflix stock tumbles as subscription growth slumps

Netflix stock tumbles as subscription growth slumps

Streaming giant Netflix has warned that its growth in subscriptions will slow substantially in the first three months of 2022.

Netflix’s stock price fell by almost 20% in after-hours trading after it forecast 2.5 million subscribers would be added during the first quarter, the smallest subscriber growth since 2015

Analysts had expected the company to add around 4 million subscriptions in this period, the same number that it added in the first quarter of 2021.


Source: Netflix

Other “stay at home” stocks have fallen significantly in the last month, such as Zoom (down 20%) and Peloton (down 38%), amid rising expectations that ‘normal life’ will return after nearly two years of the Covid-19 pandemic.

Competition has ‘intensified’

Netflix, as well as subscription video-on-demand rivals Disney+ and AppleTV+, are spending billions of dollars on content to attract and keep viewers that are no longer spending as much time at home.

This is despite Netflix recording its best audience numbers for original content during the last few months – the company said Squid Game was its biggest show of 2021, while Don’t Look Up and Red Notice were its biggest film releases of all time.

Source: Netflix

In a letter to shareholders, Netflix said: “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.

“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.

“This reinforces our view that the greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service.”


Source: Netflix

Editor’s note: this story’s headline originally stated Netflix’s subscriptions had fallen, but this is, of course, wrong – it is the rate of subscription growth that is set to fall. Corrected with apologies.

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