Shares of online-video streaming giant Netflix Inc. 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 after the California-based company’s first-quarter subscriber additions fell short of Wall Street 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, as the demand surge from the Covid-19 started to fade.
The 24-year old 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.
The streaming video on demand pioneer attributed the slowdown to a lighter content slate in the first half of the year due to production delays related to COVID-19.
“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 shareholders.
The good news for Netflix was that it posted better-than-expected earnings for the first quarter. Revenues for the quarter rose 24.2% to $7.16 billion from $5.77 billion last year, in line with its quarterly forecast. Profit rose to $1.71 million or $3.75 per share compated to $709 million or $1.57 per share in the previous year. Netflix average revenue per membership also rose 6% year over year.
Looking forward, the company expects paid membership growth will re-accelerate in the second half of 2021 as the streaming service unveils a slate of popular programming. It also expects revenues of $7.30 billion and earnings of $3.16 per share for the second quarter.
But the age of “peak” streaming may have arrived and may be having an impact on the streaming company which has become synonymous with the “stay-at-home” trade. The 15th annual Deloitte media trends report published on Monday (April 19), revealed that 82% of U.S. consumers subscribe to at least one paid streaming video service.
However, the online survey of 2,009 U.S. consumers, conducted in February 2021, also revealed that the average subscriber has four paid video streaming services – that is down from five in October.
And with warm weather approaching, people may be more selective – and cost-conscious – related to their streaming spending.
Shares of Netflix have risen about 1.9% for the year-to-date.