Netflix is facing the new challenge of stagnation from a position of strength, having lost customers for the first time in more than a decade.
A reduction of 200,000 users, or less than 0.1 percent of the company’s overall client base, was enough to send Wall Street into a panic, with shares plummeting more than 30% on Wednesday.
According to Wells Fargo analysts, the loss of subscribers and the company’s many initiatives to resuscitate business “alter the traditionally easy story” of Netflix’s solid success.
If the Q1 loss of subscribers might seem a blip at first blush, Netflix is signaling otherwise: The company anticipates a much larger drop in its second quarter — of around two million net subscribers.
“I’m not sure that’s a turning point” for Netflix, said Scott Zari of S&P Global Ratings.
“But I think it is indicative of maybe a new phase of slower growth,” he said.