Netflix (NFLX) stock fell as much as 10% on Tuesday after the company said fewer people signed up for its service than analysts expected during the first quarter.
Earnings and revenue projections also disappointed after Netflix revealed it anticipates $8.24 billion in revenue and $2.84 in diluted EPS for the second quarter — below Wall Street forecasts of $8.5 billion in revenue and $3.05 in diluted EPS.
The report, the first since co-CEO and co-founder Reed Hastings stepped down from his leading role at the company, comes as investors eagerly await updates regarding the company’s recently launched ad-supported tier, in addition to its controversial crackdown on password-sharing.
Netflix, which broadened its crackdown to include countries like Canada, New Zealand, Portugal, and Spain, in addition to the test countries of Chile, Costa Rica, and Peru, revealed it’s planning “a broad rollout” of the crackdown this current quarter that will include the U.S.
“In short, we’re off to a good start in 2023. As always, our focus remains pleasing our members and attracting great creators so that we can continue to build a wildly successful business,” the company wrote in the earnings release.
Netflix CEO Ted Sarandos poses at the premiere of the Netflix series “Beef,” Thursday, March 30, 2023, at the Tudum Theatre in Los Angeles. (AP Photo/Chris Pizzello)
Netflix also revealed more insights into its ad-supported tier, telling shareholders in the release: “Given current healthy performance and trajectory of our per-member advertising economics, particularly in the US, we’re upgrading our ads experience with more streams and improved video quality to attract a broader range of consumers.”
The ad plan, dubbed “Basic with Ads,” comes at a cost of $6.99 a month in the U.S. and serves as a complement to Netflix’s existing ad-free tiers — the Standard plan ($15.49 a month) and the Basic plan ($9.99 a month.)
Here are Netflix’s first quarter quarter results compared to Wall Street’s consensus estimates, as compiled by Bloomberg:
Revenue: $8.24 billion versus $8.18 billion expected
Earnings per share (EPS): $2.88 versus $2.86 expected
Subscribers: 1.75 million versus 2.3 million net additions expected
Story continues
This is a developing story. More to come.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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