Netflix: why stocks plummeted despite record pandemic audience
About 3.98 million people subscribed to Netflix between January and March.
The streaming video giant Netflix reported a slowdown in subscriber growth, causing its stock market to plummet. About 3.98 million people signed up for Netflix between January and March, well below the 6 million projected by the company.
Netflix said the lack of new programs may have contributed to the slowdown, adding that it expects this to recover as new seasons of successful shows roll out. Netflix shares fell 11% on Tuesday (20), eliminating $ 25 billion of the company's market capitalization.
The streaming service gained 15.8 million new subscribers last year as covid-19 advanced and made many people around the world stay at home. Much of that growth came from Asia, where Netflix gained 9.3 million new subscribers in 2020, an increase of about 65% over the previous year.
But the pandemic proved to be a double-edged sword for Netflix, because it also interrupted its production flow. "This dynamic is also contributing to a smaller content list in the first half of 2021 and, therefore, we believe that subscription growth is slower," the company said in its quarterly letter to shareholders.
The company now projects weaker customer growth, with an additional 1 million new streaming customers in the second quarter, well below the 5 million previously forecast. Netflix also faces increasingly fierce competition from new streaming services entering the market.
Disney +, a much more recent streaming service, already has 100 million subscribers, compared to Netflix's 207.6 million. However, even with slower-than-expected subscriber growth, Netflix reported revenues of $ 7.16 billion and net income of $ 1.71 billion.
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