Netflix lost 200,000 customers in the first quarter of 2022

After a decade of meteoric growth that rocked Hollywood, Netflix has hit a wall.

The

service lost 200,000 customers in the first quarter, the company said Tuesday, and it is the first time it has lost subscribers since 2011. Netflix also projects that it will lose another two million customers in the current second quarter, which which is its worst year as a public company.

Investors, analysts and Hollywood executives had braced for the company to report a slow start to the year, but Wall Street still expected Netflix to add 2.5 million customers.

The shares, already down more than 40% this year, plunged 24% to $265.11 on Tuesday in after-hours trading.

The losses far outweigh the roughly 13% decline in the Nasdaq 100 index. Among the tech index's constituents, Netflix is ​​the third-worst performer this year.

Much of its drop in 2022 is due to its previous quarterly report released in January.

Should Netflix end Wednesday's session lower, it would mark the fifth consecutive quarterly report causing a negative reaction in stocks, the longest such streak on record, according to Bloomberg data dating back to 2011. .

Netflix management pointed to the prevalence of password sharing and growing competition among the causes of the collapse.

The company assured that, in addition to its 221.6 million subscribers, there are 100 million households that use its service and do not pay for it, and are looking for a formula to convert those viewers into new subscribers.

“Our relatively high household penetration, including the large number of households sharing accounts, combined with competition, is creating revenue headwinds,” management announced in a letter to shareholders.

Netflix's troubles will leave investors wondering if latecomers will sign enough customers to justify all the money they're spending on fresh programming.

As a rebound effect of the bad Netflix data, Disney fell as much as 5.2%, while Warner Bros. Discovery Inc., owner of HBO Max, fell as much as 2.8%.

Growth in Asia

Asia, however, was the only continent to do well for the company in the first three months of 2022. There, Netflix added more than a million customers, buoyed by popular new titles like South Korean drama “We're All Dead.”

Netflix had forecast subscribers to grow by 2.5 million in the first quarter, roughly in line with Wall Street estimates.

For the current period, analysts were forecasting earnings of 2.43 million, a highly questionable figure at the moment.

Despite this bump, Netflix remains far ahead of most of its competitors outside of the United States, and is the largest

service in the world.

The company believes it can reverse the current trend by attracting new customers with better programs and finding more ways to charge its current user base.

For the second quarter, Netflix predicts sales will grow 9.7% to $8.05 billion, with a profit of $3 per share.

Both are below Wall Street forecasts of $8.23 billion and $3.02 per share.