Netflix’s shares have lost a quarter of its value on Tuesday after the company announced that its subscriber base has shrunk in the first quarter of this year.
The leading streaming television service had lost customers for the first time in a decade. The company attributed the decline to the suspension of its service in Russia as a result of Moscow’s invasion of Ukraine.
Netflix has 221.6 million customers at the end of the first quarter of this year, down marginally from the same period last year.
In the most recent quarter, the Silicon Valley tech firm posted a net income of $1.6 billion, down from $1.7 billion a year earlier. Following the revelation of the earnings numbers, Netflix shares fell 25% to $262 in after-market trades.
In an earnings letter, Netflix stated, “We’re not growing revenue as fast as we’d like.”
“Covid clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the Covid pull forward.”
Netflix believes that the time it takes for houses to have access to affordable broadband internet service and smart televisions, as well as customers sharing their accounts with others who do not live in their homes, are stifling its development.
According to the streaming giant, while roughly 222 million households pay for its service, accounts are shared with over 100 million households that do not pay for the television streaming service.
“Account sharing as a percentage of our paid membership hasn’t changed much over the years,” Netflix added, “but when coupled with the first factor, it makes it harder to grow membership in many markets.”
Last year, Netflix began experimenting with methods to profit from individuals sharing accounts, such as offering a feature that allows members to pay a small fee to add more homes to their account.