Shares of streaming company Netflix plunge more than 23 percent on Tuesday after the company reported that it had lost 200,000 subscribers in the first quarter of 2022, making it the first time the company has reported a subscriber loss in the last ten years. The company said it expects the losses to continue amid increasing competition and the ongoing Russia-Ukraine conflict. The company forecasts a subscriber loss of 2 million for the second quarter.
The company reported earnings per share of $3.53 surpassing the $2.89 that analysts had expected, according to Refinitiv. In the quarter, it reported a revenue of $7.78 billion falling short of an expectation of $7.93 billion from analysts, according to Refinitiv.
For global paid net subscriber additions, the company reported a loss of 200,000 compared to an increment of 2.73 million subscribers that analysts had expected, according to StreetAccount.
Netflix has previously issued a guidance saying that it expected to add 2.5 million net subscribers in the first quarter. Analysts estimated the company would add 2.7 million net subscribers. Compared to the first quarter o 2021, Netflix added 3.98 million paid users.
Suspending its service in Russia also played its part in the losses the company incurred. Netflix said that suspending in Russia cost it 700,000 subscribers and that if it didn’t shut down operations in Russia, it would have added 500,000 net subscribers in the first quarter.
In a letter to shareholders on Tuesday, Netflix wrote that “Our revenue growth has slowed considerably … Streaming is winning over linear, as we predicted, and 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 also pointed fingers at increasing competition from other streaming services for the losses it incurred. Password sharing by users also caused a limitation in subscriber growth, the company added. Netflix estimated that 100 million additional households are sharing accounts with its 222 million paying households.
Netflix recently added games to its platform as a way to push its revenue and increase usage but it seems the company will need to do more to come back on track.