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Netflix (NFLX) -4% after losing 430,000 subscribers in North America
Netflix (NFLX) shares were trading lower on Wednesday after the streaming giant said that it had lost subscribers in North America for only the second time in a decade.
Netflix (NFLX) shares slipped 4% in Wednesday’s trading after investors were surprised at a rare drop-off in subscriber numbers in North America amid growing competition in the streaming service sector.
After Tuesday’s close, Netflix said that it added 1.54 million new subscribers globally in Q1 to bring its overall total to 209.2 million, but it was a weakness in its single biggest market, North America, that dominated the narrative.
430,000 subscribers were lost in the region, which was due in some part to a “lumpy” release schedule caused by COVID-19 and the emergence of popular rival services, including Disney+ (DIS) and HBO Max.
It’s only the second time in 10 years that numbers have dipped in the US and Canada, but Netflix will be buoyed by the 1.02 million new subscribers in the Asia-Pacific region.
The overall Q2 report was mixed though as $2.97 earnings per share fell some way short of the $3.16 figure expected by Wall Street analysts.
Revenue during the period just about beat forecasts at $7.34bn versus $7.32bn.
Netflix noted in a statement that the pull-forward for new subscribers during the pandemic made it difficult to replicate the performance in 2021.
It added: “In Q2’21, our engagement per member household was, as expected, down vs. those unprecedented levels but was still up 17% compared with a more comparable Q2’19.”
While North America numbers were down, the 209 million total was still enough to trump the 208.7 million expectations.
However, the latest report is a sign that Netflix needs to diversify and the recently announced pivot into video games could be coming at just the right time.
Netflix shares were down in midweek, declining 3.99% to $509.86 by around midday on the Nasdaq.
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