“The company's shares cratered more than 25 percent in extended hours after the report on more than a full day's worth of trading volume,” stated CNBC. “Fellow streaming stocks Roku, Spotify and Disney also tumbled in the after-hours market after Netflix's brutal update.”
As the company closes the second quarter of Fiscal Year 2022, Netflix expects to shed 2 million subscribers. In a letter addressed to shareholders on Tuesday, Netflix stated that its content is popular, but it faces fierce competition. The company also mentioned that ending its 700,000 paid subscriptions in Russia would cause a drastic decrease in its global subscriber base.
Netflix Chief Executive Officer Reed Hastings said the platform could shift to offer “lower-priced, ad-supported tiers as a means to bring in new subscribers after years of resisting advertisements on the platform.”
“Our revenue growth has slowed considerably,” the company stated. “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.”
This admission comes after Netflix had told its shareholders that its subscribers would increase by 2.5 million during the first quarter of this year; some analysts had predicted it could grow to 2.7 million.