Netflix, streaming service company posted its weakest subscriber gains in four years as streaming competition increased, pandemic restrictions eased and live sports returned to television.
The company added 2.2 million paid subscribers globally during the quarter that ended September 30, missing Wall Street’s target of 3.4 million and its own forecast.
Shares of Netflix, one of the biggest gainers this year as people stayed home amid the pandemic, dropped nearly 6% to $494 in after-hours trading on Tuesday.
“Domestic subscribers were nearly flat, which highlights Netflix’s saturation in the U.S.,” said Ross Benes, analyst with eMarketer. With domestic additions slowing, revenue growth will likely come from price increases, he said.
The company reported a blockbuster quarter at the start of the worldwide coronavirus pandemic, adding 15.8 million paying customers from January through March.
Netflix had warned investors that a sudden surge in new sign-ups would fade in the latter half of the year as COVID-19 restrictions eased. Netflix forecast in the fourth quarter it would bring in 6 million new subscribers around the globe, short of the 6.51 million that analysts expected.
Netflix acknowledged that competition was increasing as studios around the world restructured to compete more directly for video subscribers.
Netflix officials noted the company had pulled in more subscribers in the first nine months of 2020 than in all of 2019. It ended the third quarter with 195.2 million global streaming customers.
Revenue rose 22.7% to $6.44 billion in the third quarter, edging past estimates of $6.38 billion.