While investors expected Netflix to flourish at a time when worldwide communities were confined to their homes, the company reported that it received a decelerating number of new subscribers over the course of 2020.
In the first quarter of 2020, the company managed to meet investors’ expectations, enjoying a surge of new sign-ups following the initial lockdown that took place in the first quarter of 2020. It was at the start of the first quarter that Netflix’s performance figures began to disappoint shareholders.
The streaming service company predicted to have a net total of 2.5 million customers by the third quarter of the year—a shocking decline from the amount of new customers they received at the start of the year.
During the first quarter of the year, Netflix acquired a massive 16 million new users, while the second quarter saw the streaming service gain 10 million more.
According to Raymond James analysts Andrew Marok and Aaron Kessler, pandemic-related production pauses are a large reason for Netflix’s lighter release schedule and thus the declining interest from consumers.
They explained: “While we continue to view Netflix as a long-term winner in the video-on-demand space, we remain hesitant around near-term factors including 1) uncertainty around the pace of subscriber additions post-pandemic; 2) the impact of the pandemic on content releases into 2021; and 3) the company’s pricing power as new DTC services compete for market share.”
