Netflix Inc. (NFLX.O), the world’s largest streaming service, reported a drop in members for the first time in more than a decade on Tuesday, and forecasted further declines in the second quarter, a rare failure for a firm that has long been a reliable growth engine for investors.
In after-market trade, the company’s stock dropped 23%, wiping off $30 billion in market value.
In the first quarter, Netflix lost 200,000 subscribers, falling far short of its target of 2.5 million new users. Its decision to cease service in Russia after the invasion of Ukraine in early March resulted in the loss of 700,000 members.
Other video streaming-related stocks were hit hard by the company’s bad results, with Roku (ROKU.O) down nearly 6%, Walt Disney (DIS.N) down 3%, and Warner Bros Discovery (WBD.O) down 2%.
Netflix, which has 221.6 million users, last recorded a client loss in October of 2011.
Despite the return of such highly awaited programmes as “Stranger Things” and “Ozark” and the premiere of the film “The Grey Man,” starring Chris Evans and Ryan Gosling, the firm forecasted a 2 million subscriber loss in the spring quarter. According to Refinitiv statistics, Wall Street expected 227 million in the second quarter.
Revenue increased 10% to $7.87 billion in the first quarter, falling short of Wall Street expectations of $7.93 billion. It posted $3.53 in net earnings per share, topping the $2.89 forecast on Wall Street.
Netflix has begun to invest in gaming, recognising the shift in consumer entertainment preferences, although it does not yet contribute significantly to the company’s income.
