Netflix share price tanks as the company records its first drop in users since 2011
Netflixhas lost 200,000 subscribers in the first quarter of 2022.
- It expects to lose another 2 million subscribers in the second quarter.
- The company’s share price decreased by over 26% after the drop was announced.
AdvertisementPopular streaming giant Netflix suffered a jolt on Monday as it recorded a user decline for the first time in over a decade. The company has reported that it lost 200,000 subscribers in the first quarter, which is a massive drop.
Soon after the company announced that it had lost 200,000 users, its share price fell by nearly 26%, erasing about $40 billion from its market value.
The company has blamed everyone but itself for the subscriber reduction. It has claimed that the drop is due to inflation, increased competition, password sharing and the Russian invasion of Ukraine.
This is the first user decline in over a decade for Netflix as the last time it lost users was in October 2011. However, the company expects the decline to continue as it has forecasted a drop of 2 million subscribers for the current quarter.
“Our revenue growth has slowed considerably. Netflix titles are very popular globally. However, our relatively high household penetration - when including the large number of households sharing accounts - combined with competition, is creating revenue growth headwinds,” the company said in a shareholder filing.
While Netflix has predicted a subscriber decline for Q2, it is positive about its future. “Broadband and smart TV penetration continue to grow globally with more and more connected devices, and while hundreds of millions of homes pay for Netflix, well over half of the world’s broadband homes don’t yet, representing huge future growth potential,” the company added in its filing.
The company had last month revealed that password sharing is a big issue for the company. The company had said that it wants users to stop sharing passwords with their friends and family. According to the company, it has 222 million paying households and it estimates that its service is shared with an additional 100 million non-paying households.
The company is currently testing charging users for sharing passwords in Chile, Costa Rica and Peru. This may result in a further drop in some regions as a lot of users are able to purchase Netflix only because the cost is being shared by multiple users.
“We’re working on how to monetize sharing. Remember, these are over 100 million households that already are choosing to view Netflix. They love the service. We’ve just gotta get paid in some degree for them,” Netflix chief executive officer
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