What you need to know
- Netflix says it has lost 200,000 subscribers in the first quarter of 2022.
- That's the first such loss since October 2011, and the company has warned it could lose another 2 million in the next quarter.
- Netflix blamed household sharing as its shares took a massive Wednesday tumble.
Netflix shares have plunged 26% in pre-market trading Wednesday, wiping $40 billion from its value after the company lost subscribers overall in Q1, the first such loss in 2011.
Despite recording 10% revenue growth, Netflix offered shareholders a dreary outlook on its Q1 Performace, stating revenue growth "has slowed considerably".
Netflix said there were a number of reasons for this, including a larger number of households sharing accounts rather than paying for them. Netflix estimates that while it has over 222m paying households, it has a further 100m additional households watching its content who aren't paying for it by sharing an account with a household that does.
It also stated that it was clear the pace of its growth was limited by factors it couldn't control, like the uptake of connected TVs and data costs. It also said the rise of new streaming services was having an impact on its growth.
Netflix says it plans to tackle the slowing growth, in part by focusing on the 100M+ households enjoying Netflix using someone else's account. It is also planning to roll out less expensive plans supported by advertising, CEO Reed Hastings stated that this would give consumers more choice to pay for a cheaper service, stating the success of rivals like Hulu and Disney meant there was no doubt that it would work.
At the time of publication, Netflix's shares were down $92.51, 26.54% on their Tuesday close.
