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Netflix's flood of new subscribers has slowed to a trickle

Netflix's membership growth was white-hot during much of the pandemic, but Netflix predicts a sleepy first half of the year until its proven hits start returning.

Scene from Bridgerton
Bridgerton was one of the most popular titles on Netflix late last year into 2021 -- and what Netflix claims is its most-watched series ever. 

Netflix's subscriber growth cooled in the early months of this year, with more slowing to come, an unwelcome surprise to investors who had been buoyed by the company's milestone accomplishment of surpassing 200 million global members at the end of last year. 

Netflix said subscribers increased by 4 million to 207.6 million total in January through March, according to its first-quarter results, announced Tuesday. That falls short of Netflix's January guidance to add 6 million new members. Analysts on average had expected about 6.3 million member additions, according to Thomson Reuters. 

The company also predicted that the second quarter would see only 1 million more new subscribers. That's below analysts' consensus estimate for 4.8 million more subscribers in the period. 

Netflix's share price tumbled 12% to $67.97 in after-hours trading. 

With the eye-popping size of its original-programming pipeline and its stream-at-home model, Netflix was ideally positioned to keep serving up new shows and movies to people stuck at home and desperate for entertainment in the pandemic. But Netflix has warned that some of the surges in its membership may have been pulling forward demand, essentially reeling in subscribers earlier than would they would have joined otherwise. That sets up the possibility of dry spells down the line. 

Indeed, Netflix placed some of the blame for the lethargic start to the year on that pull-forward phenomenon, as well as the fact that its release slate is lighter in the first half of 2021 -- the impact of COVID-19 production delays finally caught up with it. 

In the US and Canada, its biggest single region, Netflix added 450,000 customers, for a total of 74.4 million. In Europe, Middle East and Africa, subscriptions grew by 1.8 million. In Latin America, they were up 360,000. And in the Asia Pacific region, its smallest one, new members climbed by 1.36 million.

Overall, Netflix reported a profit of $1.71 billion, or $3.75 a share, compared with $709.1 million, or $1.57 a share, a year earlier. Revenue climbed 24% to $7.16 billion.

Analysts on average expected per-share profit of $2.97 -- matching Netflix's guidance -- and $7.13 billion in revenue.

Looking ahead to the second quarter, Netflix predicted $3.16 per share in earnings. On average, analysts expected the guidance to be $2.70.

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