Netflix’s stock has lost a quarter of its value. Tuesday, the company announced that its subscriber base had shrunk in the first quarter of this year.
The leading streaming television service had lost subscribers for the first time in a decade. The company attributed the decline to the suspension of its service in Russia as a result of Moscow’s invasion of Ukraine.
Netflix had 221.6 million subscribers at the end of the first quarter of this year, down slightly from the same period last year.
In the most recent quarter, the Silicon Valley tech firm reported a net income of $1.6 billion, down from $1.7 billion a year earlier. Following the release of the earnings figures, Netflix shares fell 25% to $262 in after-market trades.
In an earnings letter, Netflix stated, “We’re not growing revenue as quickly as we’d like.”
“Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that the Covid pull forward was responsible for the majority of our slowing growth in 2021.”
Netflix believes that the time it takes for homes to get access to affordable broadband internet service and smart televisions, as well as subscribers sharing their accounts with people who do not live in their homes, are stifling its growth.
According to the streaming giant, while nearly 222 million households pay for its service, accounts are shared with over 100 million households that do not pay for the television streaming service.
“Account sharing as a percentage of our paying membership hasn’t changed much over the years,” Netflix said, “but when combined with the first factor, it makes it more difficult to grow membership in many markets.”
Last year, Netflix began experimenting with ways to profit from people sharing accounts, such as adding a feature that allows subscribers to pay a small fee to add additional households to their accounts.
Another factor affecting Netflix is the fierce competition it faces from behemoths like Apple and Disney.
“Our plan is to reaccelerate our viewing and revenue growth by continuing to improve all aspects of Netflix,”
Netflix said, adding that it is “doubling down” on content creation.