Netflix shares sink on subscriber woes

AP Photo/Paul Sakuma

AP Photo/Paul Sakuma

Netflix Inc. shares sank Thursday on slower subscriber growth and fears of increased competition ahead.

The world's largest Internet video service provider said late Wednesday that its subscriber growth for the third quarter lagged well below management forecasts and it pointed to a recent $1 a month price increase in the U.S. as the cause. Adding to its woes are plans from rival HBO to add an Internet-only package in the U.S. next year.

Netflix added 3 million worldwide subscribers during the three months ending in September. Those gains were short of management's projection of an additional 3.7 million subscribers for the period. In the U.S., Netflix added about 1 million subscribers, missing the target of 1.3 million.

Shares fell 22 percent to $348.76 by midday Thursday. Its stock hasn't traded at levels this low since May.

The sell-off may give investors an unwelcome reminder of the beating Netflix took in 2011 after it raised prices. The company lost 800,000 subscribers and its stock slumped 80 percent for the year, although it eventually bounced back.

Customer reaction hasn't been anywhere as harsh this time and the price hike not as large. The 13 percent increase only affects subscribers who signed up since May. Prices for households with subscriptions prior to the price increase remain at $8 per month in the U.S. through May 2015.

Cantor Fitzgerald analysts said in a research note that the price hike's effect on subscriber growth was surprising, but suggested it may reflect a lack of pricing power for the company. But they reiterated a “Buy” rating on shares.businessBusiness & Real EstateEarningsNetflixStock price

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

The sidewalk on Egbert Avenue in the Bayview recently was cluttered with car parts, tires and other junk. <ins>(Kevin N. Hume/The Examiner)</ins>
New surveillance effort aims to crack down on illegal dumping

’We want to make sure we catch people who are trashing our streets’

The recall election for California Gov. Gavin Newsom is scheduled for Sept. 14. (Kevin N. Hume/The Examiner)
SF could play a big role in overcoming Democrat apathy, driving voter turnout for Newsom

San Francisco voters are not used to swaying elections. Just think of… Continue reading

Health care workers treat a Covid-19 patient who needs to be intubated before being put on a ventilator at Providence St. Mary Medical Center during a surge of cases in Apple Valley, Dec. 17, 2020. Confronted with surging infections, California became the first state in the country to mandate coronavirus vaccines or testing for state employees and health-care workers. (Ariana Drehsler/The New York Times)
In California, a mix of support and resistance to new vaccine rules

By Shawn Hubler, Livia Albeck-Ripka and Soumya Karlamangla New York Times SACRAMENTO… Continue reading

Dave Hodges, pastor at Zide Door, the Church of Entheogenic Plants that include marijuana and psilocybin mushrooms, holds some psychedelic mushrooms inside the Oakland church on Friday, July 22, 2021. (Kevin N. Hume/The Examiner)
Psychedelic spirituality: Inside a growing Bay Area religious movement

‘They are guiding us into something ineffable’

Most Read