LOS GATOS (CBS / AP) — Netflix’s subscriber growth slowed dramatically during the summer months, the Los Gatos-based streaming giant said, after a surge 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, with its video streaming service poised to surpass 200 million subscribers soon.
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.
© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.