Netflix shares fell sharply after adding fewer subscribers than expected before the price hike in the US. The company added 1.68 million subscribers in the three months to June – well below forecasts of 2.5 million.
Subscriber cancellations increased “slightly and unexpectedly” due to higher costs for existing users.
If that loss extends when Wall Street opens on Tuesday, the stock will have lost about a quarter of its value this year. Netflix shares are often subject to wide swings as investors bet on its bid to redefine global viewing habits.
Wedbush Securities analyst Michael Pachter said: “The shares are down because their domestic subscriber growth has slowed … and domestic gains are fueling their international losses.” Netflix admitted that growth had slowed in both the US and international markets: “We are growing, but not as fast as we would like.”
Analysts estimate that about 20 million subscribers could be forced to pay between $1 and $2 more per month by the end of this year. Netflix said the increases were one reason why the company will add just 300,000 subscribers in the U.S. in the three months to September — far fewer than the 880,000 it added during the same period last year.
Revenue for the quarter rose 28% to $2.1 billion, helped in part by higher Netflix prices. The streaming service, known for shows like Orange is the New Black, House of Cards and Unbreakable Kimmy Schmidt, is now available in almost every country. But it faces competition from rival services like Amazon Prime and Hulu.
It remains outside of China due to what it calls a “more difficult regulatory environment.” The mainland has yet to allow even streaming services like Disney or Apple.
