FILE - This Aug. 13, 2020 photo shows a logo for Netflix on a remote control in Portland, Ore. Netflix Inc. (NFLX) on Tuesday, Oct. 20, 2020 reported third-quarter net income of $790 million. The Los Gatos, California-based company said it had profit of $1.74 per share. (AP Photo/Jenny Kane, File)

FILE - This Aug. 13, 2020 photo shows a logo for Netflix on a remote control in Portland, Ore. Netflix Inc. (NFLX) on Tuesday, Oct. 20, 2020 reported third-quarter net income of $790 million. The Los Gatos, California-based company said it had profit of $1.74 per share. (AP Photo/Jenny Kane, File)

Netflix reports a summer slump in subscriber growth

Added 28 million subscribers in the first nine months of the year

Netflix’s subscriber growth slowed dramatically during the summer months after surging in the spring fueled by pandemic lockdowns that corralled millions of people in their homes.

The summer slump came as more people sought distraction from the pandemic outdoors and major U.S. professional sports resumed play, offering other entertainment alternatives to the world’s most popular video streaming service.

The drop-off disclosed Tuesday in Netflix’s latest earnings report was more dramatic than management had warned it might be.

After picking up 2.2 million customers in the July-September period, Netflix finished the quarter with 195.2 million worldwide subscribers. Earlier, company had forecast an addition of 2.5 million subscribers during the quarter.

Even so, Netflix is still ahead for the year. It has added 28 million subscribers through the first nine months of the year — locking in the company’s largest annual increase in its history.

But the momentum seems to be tapering off, based on the trends Netflix is seeing. The company is projecting a gain of 6 million subscribers in the October-December period, down from 8.8 million last year. Analysts were expecting Netflix to project a gain of 6.4 million subscribers for the final quarter of this year.

The influx of new subscribers has helped boost its stock by 59% so far this year. But shares of Netflix fell $28.53, or 5.4% to $496.89 in after-hours trading after the results came out.

Wall Street generally still sees big things ahead for Netflix, which is based in Los Gatos, California, with its video streaming service poised to surpass 200 million subscribers soon.

Even with the summer slowdown, Netflix’s popularity has spurred speculation whether the company may soon raise its U.S. monthly subscription prices by another dollar or two in the U.S., as it recently did in Canada earlier this month. The company recently stopped offering free one-month trials in the U.S., a move some analysts viewed as a precursor to a potential price increase. Netflix’s most popular U.S. plan costs $13 per month.

The company has periodically raised its prices to help pay for the original programming that has helped turn it into a cultural phenomenon in the face of intensifying competition from even bigger rivals such as Amazon and Apple. Higher prices also help boost Netflix’s profit, which have remained relatively modest in light of its video service’s widening appeal.

After a “blowout” first quarter and a strong second, it is “it is reasonable to think” Netflix would take a breather in new subscriber gains for the third, said Dan Morgan, a senior portfolio manager at Synovus Trust.

The company earned $790, million, or $1.74 per share, in the third quarter, up 19% from $665 million, or $1.47 per share, a year earlier.

Revenue climbed 22.5% to $6.44 billion from $5.24 billion.

Analysts were expecting earnings of $2.13 per share and revenue of $6.39 billion, according to a poll by FactSet.

Netflix said as the world “hopefully recovers” from COVID-19 in 2021, it expects its subscriber growth to revert back to pre-pandemic levels. That means growth will be much slower in the first half of next year than it was this year.

By The Associated Press

Entertainment

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, announced more than 1,500 active cases in Alberta Monday afternoon and five additional deaths. (Photo by Chris Schwarz/Government of Alberta)
New COVID rules coming

Central zone active cases up by 100 in last 24 hours

The revised plans for the Dream Centre feature a two-storey renovated building. The centre launched a campaign Monday in hopes of raising more than a million to help with building renovation. (Contributed image).
Red Deer Dream Centre launches campaign, hopes to raise $1.4M

A proposed addiction treatment centre is hoping to raise $1.4 million to… Continue reading

COVID-19. (Image courtesy CDC)
Red Deer area seniors facility pauses visits after staff tests positive for COVID

A Red Deer County seniors facility has put the breaks on visitors… Continue reading

.
Alberta confirmed more than 1,500 COVID-19 cases Sunday

Alberta confirmed 1,584 COVID-19 cases Sunday afternoon. The total active cases went… Continue reading

Lynn Van Laar, chair of this year’s Christmas Wish Breakfast, said the event was planned outdoors to minimize the risk of COVID. Photo by Mamta Lulla/Advocate staff
Outdoor Christmas Wish Breakfast helps central Alberta families this holiday season

The coronavirus pandemic isn’t going to stop children from having a merry… Continue reading

In this Nov. 17, 2020, photo released by China's Xinhua News Agency, a Long March-5 rocket is seen on the launch pad at the Wenchang Space Launch Site in Wenchang in southern China's Hainan Province. Chinese technicians were making final preparations Monday, Nov. 23, 2020, to launch a Long March-5 rocket carrying a mission to bring back material from the lunar surface in a potentially major advance for the country's space program. (Guo Cheng/Xinhua via AP)
China launches mission to bring back material from moon

China launches mission to bring back material from moon

President Donald Trump drives a golf cart as he golfs at Trump National Golf Club in Sterling, Va., Sunday, Nov. 22, 2020. (AP Photo/Manuel Balce Ceneta)
Biden signals sharp shift from Trump with Cabinet picks

Biden signals sharp shift from Trump with Cabinet picks

Licensed vocational nurse Caren Williams, left, collects a nasal swab sample from a traveler at a COVID-19 testing site at the Los Angeles International Airport in Los Angeles, Monday, Nov. 23, 2020. Los Angeles County announced new coronavirus-related restrictions Sunday that will prohibit in-person dining for at least three weeks as cases rise at the start of the holiday season and officials statewide begged Californians to avoid traveling or gathering in groups for Thanksgiving. (AP Photo/Jae C. Hong)
LA on the brink of a stay-home order as COVID cases rise

LA on the brink of a stay-home order as COVID cases rise

FILE - In this Nov. 7, 2020, file photo, Harjas Singh, 1, reaches out for his father, Umeet Singh, while held by his mother, Preet Kaur, as they attend a rally with their daughter, Nader Kaur, right, celebrating the election results in Detroit. (AP Photo/David Goldman, File)
Feds agree to help Biden transition after more Trump defeats

Feds agree to help Biden transition after more Trump defeats

3rd major COVID-19 vaccine shown to be effective and cheaper

3rd major COVID-19 vaccine shown to be effective and cheaper

Pedestrians stroll along Spring Garden Road in Halifax on Thursday, Nov. 19, 2020. THE CANADIAN PRESS/Andrew Vaughan
Atlantic bubble bursts while COVID-19 cases continue to rise further west

Atlantic bubble bursts while COVID-19 cases continue to rise further west

Writer Tanya Talaga poses for a portrait during promotional day for Audible Podcasts in Toronto, Friday, Sept. 4, 2020. THE CANADIAN PRESS/Chris Young
Tanya Talaga’s ‘Seven Truths’ podcast ‘goes to the heart of Anishinaabe storytelling’

Tanya Talaga’s ‘Seven Truths’ podcast ‘goes to the heart of Anishinaabe storytelling’

A sign at a Laval, Que., Walmart store is shown on Tuesday, May 3, 2016. The country's largest organization of small businesses is calling on the Ontario government to think twice about its lockdown policies that close most small businesses while leaving big box retailers open. THE CANADIAN PRESS/Ryan Remiorz
Small businesses seek changes to Ontario lockdown rules as big box stores remain open

Small businesses seek changes to Ontario lockdown rules as big box stores remain open

Most Read