Netflix’s shares plummeted more than 20% in after-hours trading Tuesday after the streaming giant revealed it had lost 200,000 customers in the first quarter, marking the first time in a decade that it has lost subscribers. It also fell short of revenue estimates.
What’s at stake: Netflix’s stock has already dropped more than 40% year so far, owing to rising competition and Netflix’s reduced user growth estimates for Q1.
Netflix blamed its “quite a high household penetration” for generating “revenue growth hurdles” in the first paragraph of its note to shareholders, saying, “Our revenue growth has slowed considerably as our results and projection below illustrate.”
The big picture: Netflix started testing a crackdown on password sharing in March as a way to boost memberships.
Netflix announced on Tuesday that, in addition to its 222 million paying subscribers, it estimates that over 100 million additional households are using the service without paying for it, with over 30 million in the United States and Canada, the company’s most lucrative region.