Netflix released its quarterly report yesterday, and the results for the months of January and March were underwhelming. The streaming service was projected to gain 2.5 million customers in the first three months of the year but instead lost 200,000.
The number caused the company’s stock to plummet by nearly 25% in after-hours trade.
Netflix CEO Reed Hastings stated that he dislikes “the complexity of advertising” and favors “the simplicity of subscription,” but that he is also “a fan of consumer choice,” implying that the business is considering introducing a cheaper ad-supported tier.
Netflix had 4 million paying subscribers over the same January-March period in 2021, but only 0.5 million this year. However, since leaving Russia, the network has lost 700,000 members, resulting in a net loss of clients for the first time since October 2011.
The primary difficulty ahead is the soft acquisition, but Reuters pointed out that Netflix is now paid by 100 million households in the United States, and the firm should try to expand into other regions. Rivals such as HBO Max and Disney are also putting up a tough fight.
Despite the reintroduction of huge titles like “Stranger Things” and “Ozark,” all major streaming services are projecting slower growth, with Netflix predicting that 2 million more users will cease paying in the next three months.
These figures resulted in a dramatic loss in value, with Netflix shares dropping 26% after the bell on Tuesday, wiping out $40 billion in market capitalization. The downdraft hit competitors as well: Roku was down 6%, Walt Disney was down 5%, and Warner Bros. Discovery was down 3.5 percent. Netflix has lost half of its value since announcing in January that it expected slow subscriber growth.