Netflix shares fall despite reporting higher quarterly profit

Shares of the popular streaming site Netflix tanked nearly 20 per cent in extended hours on Thursday after the company's quarterly report showed subscriber growth was below expectations.

Netflix added 8.28 million subscribers globally in the quarter, below its own forecast of 8.50 million, to end the period with 221.84 million subscribers.

The company added 1.19 million customers in the U.S. and Canada region during the quarter, while EMEA region subscriber additions were 3.54 million, LATAM were up 0.97 million and APAC rose 2.58 million.

Looking ahead, the company expects to add 2.50 million subscribers in the first-quarter of 2022.

The company blamed increased competition from other streaming companies for the slowdown of new subscribers.

"Consumers have always had many choices when it comes to their entertainment time - competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering," Netflix said.

"While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched."

Netflix recently announced price increases in the US and Canada. In the US, the monthly cost for the basic plan rose by 1 dollar to $9.99 dollars, while monthly standard plan rose from 13.99 dollars to 15.49 dollars and the premium plan rose from 17.99 dollars to 19.99 dollars. This makes its regular subscription more expensive than its rivals.

Netflix released its earnings for its fourth-quarter that increased from the same period last year and beat estimates.

The company's earnings came in at 607 million dollars, or 1.33 dollars per share. This compares with 542 million dollars, or 1.19 dollars per share, in last year's fourth-quarter.

Analysts on average had expected the company to earn 0.82 dollars per share, according to figures compiled by Thomson Reuters.

Analysts' estimates typically exclude special items.

The company's revenue for the quarter rose 16.1 per cent to 7.71 billion dollars, from 6.64 billion dollars last year.

Analysts had a consensus revenue estimate of 7.71 billion dollars for the quarter.

Revenue growth was driven by an 9 per cent increase in average paid streaming memberships and 7 per cent growth in average revenue per membership.

Looking forward to the first quarter, Netflix expects revenues of 7.90 billion dollars and earnings of 2.86 dollars per share. Analysts currently expect earnings of 3.45 dollars per share and revenues of 8.08 billion dollars.

Netflix closed Thursday's trading at 508.25 dollars, down 7.61 dollars or 1.48 per cent, on the Nasdaq. The stock further slipped 91.78 dollars or 18.06 per cent in the after-hours trading.