It looks like the party’s over for streaming giant Netflix (NASDAQ:NFLX) and its shareholders.
The boom that Netflix enjoyed during the pandemic as people sheltered in place at home and binge watched movies and television shows appears to have come to a halt as the company reported disappointing subscriber growth that sent its share price down nearly 15% in premarket trading.
The streaming service added 3.98 million subscribers in the first quarter of this year, missing Wall Street’s estimate of 6.29 million subscribers and its own forecast of 6 million. The current quarter will be even more challenging, with Netflix predicting only one million new customers worldwide, less than a quarter of the 4.44 million forecast by analysts.
Netflix has been warning for months that its growth would slow after customers emerged from COVID-19 hibernation, but few expected it to stall so quickly. The first quarter of 2020 had been the strongest in the company’s history, with 15.8 million new customers added.
The first three months of this year marked the slowest quarter for Netflix since 2013, when the company added three million customers.
Netflix also faces growing competition from a host of other streaming services that include Disney+, Apple TV and Amazon Prime, to name only a few. A lack of new shows also contributed to the slump, the company said. Unlike the previous quarter, Netflix didn’t have as many hit programs such as "Bridgerton" or "The Queen’s Gambit."
Despite the slowdown, Netflix is in the strongest financial position in its history. It reported net income of $1.71 billion U.S., more than double a year ago, and generated free cash flow of $692 million U.S. during the quarter. Earnings amounted to $3.75 U.S. a share, ahead of the $2.98 U.S. that analysts had expected.
Netflix stock fell nearly 15% to $480 U.S. a share in New York trading after its latest earnings were announced.
