Daily Times

Netflix expects to add just 2.5 million subscribers this quarter, a number that falls short of estimates and would mark the slowest start to a new year for the company in at least a decade.

Stock prices of lockdown-era favourite Netflix nosedived on Thursday, in a latest sign that the boom for stay-at-home shares appears to be vanishing. Shares in streaming giant Netflix plummeted nearly 20pc, as the company forecast new subscriber growth in the first quarter would be less than half of analysts’ predictions. It also expects to add just 2.5 million users in the current quarter, well short of estimates.

Netflix added just 18.2 million customers in 2021, down about 50 per cent from the record year before. It is forecasting that slowdown will continue, at least for another quarter, with the outlook for the current period missing Wall Street’s projection of 6.26 million new subscribers.

Netflix CEO Reed Hastings said there were a myriad of reasons for the company’s low guidance, pointing to increased competition as a cause. Company executives struggled to identify why growth has slowed. They blamed a tough economy, especially in Latin America, as well as lingering fallout from the pandemic.

Management also acknowledged the potential impact from rival streaming services. Co-founder Reed Hastings has long dismissed competition as a problem, noting Netflix grew as many rivals came into the business. But Netflix is changing its tune slightly.

“It’s tough to pinpoint why [subscriber] acquisition hasn’t recovered to pre-Covid levels,” chief financial officer Spencer Neumann said on a webcast on Thursday. He and his colleagues reiterated their confidence in the long-term prospects for the business.