Netflix’s market value tumbles as it predicts subscriber slowdown

·2 min read
<span>Photograph: Niko Tavernise/AP</span>
Photograph: Niko Tavernise/AP

Netflix’s market value plunged by almost a fifth after forecasting a dramatic slowdown in subscriber growth in the first quarter, as the pandemic-fuelled streaming boom fizzles out and competition from newer rivals such as Disney+ grows.

Netflix expects to add only 2.5 million new subscribers globally in the first three months of the year, well down on the 4 million new sign-ups in the first quarter of 2021, and almost half the number expected by analysts.

Shares in the streaming company plunged by almost 20%, almost $45bn, as investors took fright at the unexpected slowdown in growth.

“While retention and engagement remain healthy, acquisition growth has not yet re-accelerated to pre-Covid levels,” Netflix said, pointing to “Covid overhang and macroeconomic hardship” in parts of the world such as Latin America.

Netflix added 8.3 million new subscribers in the final quarter of last year, thanks to hits such as the Leonardo DiCaprio and Jennifer Lawrence film Don’t Look Up, and Squid Game, broadly in line with analyst expectations.

Overall, Netflix added 18.2 million new subscribers last year, half the number it gained in 2020 when the pandemic fuelled a streaming boom as the public sought to alleviate boredom during lockdowns.

Netflix admitted that the streaming wars against rivals such as Disney, Apple, HBO Max, Peacock and Amazon, which on Wednesday announced details of its mega-budget Lord of The Rings TV adaptation, is intensifying but that it remains in growth in all territories.

“Consumers have always had many choices when it comes to their entertainment time – competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering,” the company said.

“While this added competition may be affecting our marginal growth, we continue to grow in every country and region in which these new streaming alternatives have launched.”

Last year, Netflix added the fewest number of UK subscribers since it launched in 2012.

Netflix pointed to a number of big releases, including Ozark, Bridgerton and Stranger Things, later in the first quarter that it expects to drive a return to stronger growth.

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