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Shares in Netflix have slumped by 35% after it revealed a sharp drop in subscribers and warned millions more are set to quit the streaming service.<\/p>\n
It wiped more than $50bn off the firm\u2019s market value as experts warned it faced a struggle to get back on track.<\/p>\n
Netflix faces intense competition from streaming rivals, but was also hit after it raised prices and left Russia.<\/p>\n
Yet some cast doubt on its plans to boost growth, which include bringing in a free ad-supported service.<\/p>\n
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It also plans to crack down on password sharing, estimating that more than 100 million non-paying households watch the service this way.<\/p>\n
In a sign of the unease, one of America\u2019s best known investors, William Ackman, ditched his $1.1bn investment in Netflix on Wednesday, taking a loss of more than $400m.<\/p>\n
His hedge fund Pershing Square Capital Management had bought the shares just three months ago.<\/p>\n
In a brief statement, Mr Ackman said that while Netflix\u2019s plans to change its business model made sense, investing in the company felt too risky.<\/p>\n
\u201cWhile Netflix\u2019s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company\u2019s future prospects with a sufficient degree of certainty,\u201d he wrote.<\/p>\n
In a trading update on Tuesday, Netflix said its total number of subscribers had fallen by 200,000 in the first three months of 2022, falling well short of its target.<\/p>\n It also said some two million more were likely to quit the service in the three months to July.<\/p>\n Some analysts warned that, after period of turbo-charged expansion during the pandemic, the streaming giant has run out of easy ways to grow.<\/p>\n Squeezed consumers are cutting back on streaming services to save money, while some feel there is too much content to choose from amid an avalanche of competition from rivals such as Disney and Amazon.<\/p>\n \u201cNetflix\u2019s wider problem, along with the rest of the sector is that consumers don\u2019t have unlimited funds, and that one or two subscriptions is usually enough,\u201d said Michael Hewson, an analyst at CMC Markets.<\/p>\n \u201cOnce you move above that something has to give in a cost-of-living crisis, and while Netflix is still the market leader, it doesn\u2019t have the deeper pockets of Apple, Amazon or Disney, which makes it much more vulnerable to a margin squeeze.\u201d<\/p>\n But Julian Aquilina, senior TV analyst at the media research firm Enders Analysis, said it was wrong to write the firm off.<\/p>\n \u201cThe streaming market is maturing and the high expectations people had about Netflix are being reset.<\/p>\n \u201cBut I think it will remain the market leader, it has such a commanding position. If people are going to ditch a subscription, Netflix won\u2019t be the first one they choose.\u201d<\/p>\n He added that the firm had just put up its prices \u201cwhich always leads to a drop in subscribers, but also means it\u2019s making more revenue per customer\u201d.<\/p>\n Netflix remains the world\u2019s leading streaming service with more than 220 million subscribers. It is increasingly producing its own content and shows such as the Crown, Bridgerton and Squid Game have been global hits.<\/p>\n The firm had enjoyed uninterrupted quarterly growth in subscribers since October 2011 but on Tuesday it admitted it was losing customers to rivals, while struggling to expand due to password sharing.<\/p>\n It also said a decision to raise prices in key markets had cost it 600,000 subscribers in North America alone, while its exit from Russia over Ukraine lost it 700,000.<\/p>\n Despite the challenges, revenue grew by $7.8bn (\u00a36bn) in the first three months of the year, up 9.8% compared with the same period last year.<\/p>\n That marked a slowdown from earlier quarters, while profits fell more than 6% to roughly $1.6bn.<\/p>\n Netflix\u2019s shares plunged 35% on Wednesday, and fell a further 3.5% on Thursday.<\/p>\n MORE:<\/strong><\/p>\n <\/p>\n![\"netflix](\"https:\/\/www.ghanamma.com\/wp-content\/uploads\/2022\/04\/_124240687_dba070cd-1150-4adc-8d42-1271465be251.jpg\")
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