NEW YORK (Washington Insider Magazine) – Due to a bleak view for future growth, Netflix’s shares dropped as much as 20% in after-hours trade.
Netflix (NFLX) currently boasts a global subscriber base of 221.8 million people. The business stated on Thursday that it added 8.2 million members in the fourth quarter of 2021.
The amount fell short of the streaming service’s own projections, which predicted an increase of 8.5 million customers. The big surprise, though, was that the business also predicted 224.3 million subscribers in the first quarter of 2022. That’s only a 2.5 million increase, which is lower than analysts had predicted.
Netflix had a profit of $607 million in the fourth quarter, up from $542 million the year before. Revenue increased by 16% to $7.7 billion.
In a letter to investors, the business stated that intense competition from streaming companies may be harming its marginal growth.
Netflix’s CEO, Reed Hastings, noted on the company’s post-earnings call that the company’s low estimate was due to a variety of factors. He cited greater competition as a factor but pointed out that competitors such as Amazon and Hulu have been there for a long time.
He also expressed optimism about the prospects of streaming, as well as Netflix’s significant market share and consistent execution. “For now, we’re staying calm,” Hastings remarked.
The company announced Friday that it would hike pricing in the United States and Canada, 2 of its most important regions, as a result of its slowing growth. Netflix’s standard plan subscription fee in the United States increased by $1.50 to $15.49. The basic plan has increased by $1 to $9.99, while the premium plan has risen by $2 to $19.99.
Netflix is attempting to offset its slow growth with increasing membership costs in response to competition from Disney+ and HBO Max, which is a division of CNN parent company WarnerMedia.
One glimmer of hope for the streamer was in the United States and Canada, where subscriptions climbed by 1.2 million in the fourth quarter, a significant increase from the roughly 70,000 added the previous quarter.
Other streaming companies were also affected by Netflix’s dramatic fall this Thursday.
Disney shares were down approximately 4.5 percent in the after-hours trade, while Roku was down around 6%.
