Netflix falls sharply as price rises scare away subscribers
TV streaming service well below expectations for new subscribers in last 3 months
- The company is known as being a particularly volatile stock, as investors gamble on its long-term success
- Shares were down 13% in after-hours trading in New York
Updated : 09:19
Shares in television streaming service Netflix dropped sharply in after-hours trading in Wall Street on Monday, after a price rise for its users led to cancellations and a drop in new users.
The numbers sent Netflix shares tumbling 13% to $85.90 in after-hours trading in New York.
Forecasts of 2.5mn new users in the three months to June were well-missed, with only 1.68mn being added during that time.
Netflix has traditionally been seen as a volatile stock, with investors gambling on its ability to shape global television viewing habits leading to wild swings in its price.
The company admitted that they had fallen short of expectations, with a letter sent to shareholders this week.
“We are growing, but not as fast as we would like or have been,” CEO Reed Hastings wrote in the letter.
“We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering,” it added.
Netflix actually announced the price rise for new members 2 years ago, with a delay in the effect for existing customers for 2 years, which ended recently.
Many have attributed Netflix's woes to the saturating of the market with other providers such as Hulu and Amazon Prime coming up with rival services. The letter denied this however.
The streaming service, best known for shows such as Orange is the New Black, House of Cards and the Unbreakable Kimmy Schmidt, is now available in almost every country.