Netflix misses estimates for new subscribers as pandemic boost slows

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Netflix Inc NFLX.O on Tuesday reported fewer paid subscribers than Wall Street expected in the third quarter as streaming competition increased and live sports returned to television.

The company said it added 2.2 million paid subscribers globally during the quarter that ended Sept. 30 compared with analysts’ estimates of 3.4 million, according to IBES data from Refinitiv. (Graphic: tmsnrt.rs/3jhdq7e)

Looking ahead, Netflix forecast it would bring in 6 million new subscribers around the globe, short of the 6.51 million that analysts expected.

Shares of Netflix, one of the biggest gainers this year as people stayed home amid the pandemic, dropped nearly 6% to $494 in after-hours trading on Tuesday.

Netflix had warned investors that a sudden surge in new sign-ups would fade in the latter half of the year as COVID-19 restrictions eased.

During the quarter, Netflix released “Emily in Paris”, “Enola Holmes” and “The Devil All the Time.”

The streaming video pioneer is trying to win new customers and fend off competition as viewers embrace online entertainment. The pandemic sparked new interest in the service as people around the world were told to stay home, movie theaters went dark and sports leagues canceled live games.

Netflix acknowledged that competition was increasing as studios across Hollywood from Walt Disney Co DIS.N to AT&T Inc’s T.N WarnerMedia have restructured to compete more directly for video subscribers.

“Competition for consumers’ time and engagement remains vibrant,” Netflix said in a letter to shareholders.

In recent months, major sports resumed play and nascent streaming services, including AT&T’s HBO Max and Comcast Corp’s CMCSA.O Peacock, offered audiences new options.

Netflix said its results reflected the fact that it saw such a big surge in customers early in the pandemic.

“We continue to view quarter-to-quarter fluctuations in paid net adds as not that meaningful in the context of the long run adoption of internet entertainment, which we believe is still early and should provide us with many years of strong future growth as we continue to improve our service,” the company said.

Revenue rose 22.7% to $6.44 billion in the third quarter, edging past estimates of $6.38 billion.

Net income rose to $790 million, or $1.74 per share, in the quarter from $665.2 million, or $1.47 per share, a year earlier.

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