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

Just Posted

Pregnant women are in the high-risk category currently prioritized for booster shots in San Francisco. (Unai Huizi/Shutterstock)
What pregnant women need to know about COVID and booster shots

Inoculations for immunosuppressed individuals are recommended in the second trimester

Examiner reporter Ben Schneider drives an Arcimoto Fun Utility Vehicle along Beach Street in Fisherman’s Wharf on Tuesday, Oct. 19, 2021. (Kevin N. Hume/The Examiner)
Could San Francisco’s tiny tourist cruisers become the cars of the future?

‘Fun Utility Vehicles’ have arrived in The City

The Science Hall at the City College of San Francisco Ocean campus is pictured on Jan. 14. The Democrats’ Build Back Better bill would enable free community college nationwide, but CCSF is already tuition-free for all San Francisco residents. (Kevin N. Hume/The Examiner)
What Biden’s Build Back Better bill would mean for San Franciscans

Not much compared to other places — because The City already provides several key features

A directional sign at Google in Mountain View, Calif., on Oct. 20, 2020. Workers at Google and Amazon are demanding their companies pull out of Project Nimbus, a $1.2 billion contract to provide cloud services for the Israeli military and government. (Laura Morton/The New York Times)
Google and Amazon employees criticize $1.2 billion cloud services contract with Israel

‘We can create a world in which tech companies can thrive without doing harm’

Most Read