- Netflix shares dropped by up to 8% in premarket trading on Wednesday.
- The video-streaming service missed its subscriber-growth forecast and issued weak guidance.
- Netflix plans to spend $17 billion on content this year to drive future growth.
- See more stories on Insider’s business page.
Netflix shares tumbled as much as 8% in premarket trading on Wednesday after the video-streaming platform added fewer subscribers than expected last quarter, and warned of further weakness.
The media company grew its global paid memberships to 208 million, missing its forecast of 210 million. It added fewer than 4 million subscribers – less than half the 8.5 million it signed up in the preceding quarter, and a quarter of the almost 16 million it attracted in the first quarter of 2020.
Netflix also signaled its subscriber growth is yet to recover. It expects to add only 1 million memberships this quarter, down from 10 million in the second quarter of 2020.
The group’s bosses blamed the subscriber-growth shortfall on the pandemic, saying it pulled forward demand and delayed the release of new TV shows and movies on its platform. They dismissed the idea that Disney Plus – which has amassed over 100 million subscribers since it launched 16 months ago – was responsible.
“We had those 10 years where we’re growing smooth as silk and then just a little wobbly right now,” CEO Reed Hastings said on the earnings call.
Despite its challenges, Netflix grew revenue by 24% year-on-year to $7.2 billion last quarter, and scored a 140% increase in net income to $1.7 billion.
The company expects subscriber growth to rebound in the second half of this year, fueled by new seasons of “You,” “The Witcher,” and “Sex Education,” as well as blockbusters including “Don’t Look Up” and “Red Notice.” It also plans to spend $17 billion on content this year to ensure a steady flow of new releases going forward.