Share prices for streaming video companies fell in extended trading on Tuesday after Netflix announced earnings that showed the sector leader lost subscribers for the first time in more than a decade.
Shares of Disney fell as much as 5%, while Roku fell 6% after working hours after rising nearly 8% during regular trading. Warner Bros. Discovery, the owner of HBO Max, fell about 4%, and Paramount (formerly ViacomCBS) fell almost 6%.
The news highlighted investors’ fears of a broader slowdown in consumer spending.
Netflix fell more than 25% in extended trading on Tuesday after reporting a loss of 200,000 subscribers in its most recent quarter and expecting a loss of 2 million subscribers in the second quarter.
Reed Hastings, Co-CEO, Netflix speaks at the 2021 Milken Institute Global Conference in Beverly Hills, California, USA on October 18, 2021.
David Swanson | Reuters
The video streamer also warned Tuesday that it could start cracking down on password sharing, which could increase the number of paid subscribers. Netflix has allowed its 222 million users to share their account information with friends and family during its booming growth, but now it wants all users to pay. It is estimated that as many as 100 million people streamed Netflix with someone else’s password.
Netflix and other streaming companies were significantly boosted by the pandemic as consumers spent more time and money streaming content from home.
But as the US economy reopens and people spend more time out of their homes, it’s almost as if the pandemic has never happened – at least in terms of the relative weakness of the Netflix stock.
On Tuesday, the shares reached the lowest level since November 2019. The share has now fallen more than 40% for the year and more than 60% from the peak in November 2021.