Internet television network Netflix late Thursday edged above analyst expectations for new subscribers in the fourth quarter but missed its own target. It also guided below views for subscribers in the current quarter. Netflix stock fell hard, plunging about $100 a share, in extended trading.
In after-hours trading on the stock market today, Netflix stock tumbled 20%, near 407. During the regular session Thursday, Netflix stock fell 1.5% to close at 508.25.
The Los Gatos, Calif.-based company added 8.28 million new subscribers in the December quarter. Analysts had expected 8.23 million new subscribers, according to FactSet. Three months ago, Netflix forecast adding 8.5 million subscribers in the fourth quarter.
"We slightly over-forecasted paid net adds in Q4," company executives said in a letter to shareholders. "As our membership base continues to grow, there will naturally be more volatility in our absolute paid net adds performance vs. forecast."
Netflix ended 2021 with 221.8 million subscribers worldwide, with 34% of those in the U.S. and Canada.
For the current quarter, Netflix forecasts adding 2.5 million new subscribers. Analysts were modeling 5.8 million net adds in the first quarter. In the same quarter last year, it added 3.98 million subscribers.
Netflix Stock: Profit On In-Line Sales Beats Views
On a positive note, Netflix delivered better-than-expected profit on in-line sales for the December quarter.
Netflix earned $1.33 a share on sales of $7.71 billion in the fourth quarter. On a year-over-year basis, earnings rose 12% while sales climbed 16%. Analysts had predicted earnings of 83 cents a share on sales of $7.71 billion.
The Netflix earnings report comes less than a week after the company announced price increases for customers in the U.S. and Canada.
Popular Netflix content in the fourth quarter included original movies "Red Notice" and "Don't Look Up" and TV series "Squid Game," "The Witcher" and "You."
Netflix faces intensifying competition in the streaming video market. Its rivals include Walt Disney's Disney+ and Hulu, AT&T's HBO Max, ViacomCBS-owned Paramount+, and Comcast's Peacock.
Netflix Stock Ranks First In Low-Rated Group
Netflix stock has a middling IBD Composite Rating of 67, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Netflix stock ranks first among 23 stocks in IBD's Leisure-Movies & Related industry group. But that group ranks No. 167 out of 197 industry groups that IBD tracks. IBD trading guidelines recommend focusing on top-rated stocks in leading industry groups.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
