The healthy growth spurt that Netflix has enjoyed this year because of the coronavirus is finally coming to an end.
The video-streaming giant — which has been one of a handful of companies to get a big business boost from the pandemic — on Tuesday posted weaker-than-expected third-quarter earnings and slowing subscriber growth, sending its shares tumbling nearly 6 percent in after-market trades.
The Los Gatos, Calif.-based company said the tapered-off subscriber growth was largely “expected” after it posted “record first half results.” This spring, locked-down consumers turned to Netflix while pro sports leagues shut down, concert tours got canceled and movie-theaters were shuttered because of state-ordered social-distancing rules.
But during the three months ended Sept. 30, Netflix said it added just 2.2 million global subscribers. That missed the 2.5 million additions it had forecasted in July, as well as last year, when it added 6.8 million paid customers.
It’s also sorely short of the 15.8 million and 10.1 million subscribers it added in the first and second quarters. The latest additions bring Netflix’s total subscriber tally to nearly 195.2 million, lower than the 196.2 million, analysts had anticipated.
Netflix shares on Tuesday sank 5.9 percent in after-hours trading to $494.40.
Meanwhile, Netflix executives admitted the company faces heightened competition this fall from a number of new streaming platforms including Disney’s new Disney+ subscription service, as well as AT&T’s HBO Max and NBC’s Peacock.
Looking ahead, the streamer said it expects to add another 6 million paid subscribers in the fourth quarter, lower than the 8.8 million subscribers it netted in the same period a year ago.
In the quarter, profit rose 19 percent to $790 million, or $1.74 a share versus $665 million, or $1.47 a share, a year earlier. Wall Street had forecast profits of $2.13 a share. Revenue rose 23 percent to $6.44 billion.
Co-Chief Executive Officers Reed Hastings and Ted Sarandos touted new shows during the quarter, such as dating reality show “Indian Matchmaking,” Darren Star’s “Emily in Paris,” starring Lily Collins and “Cobra Kai,” a series based on “The Karate Kid.”
But ultimately, the execs admitted the pandemic has hit production, which is slowly returning after being shut down since mid-March.
“As the world hopefully recovers in 2021, we would expect that our growth will revert back to levels similar to pre-COVID,” Netflix execs wrote in their letter to shareholders Tuesday.
Netflix said it is has restarted production on some of its biggest titles including season four of “Stranger Things,” action film “Red Notice,” starring Dwayne Johnson, Gal Gadot and Ryan Reynolds; and season two of fantasy series “The Witcher.”