Online video streaming giant Netflix disappointed investors with quarterly subscriber growth below its own forecast and lower profit forecasts for the next quarter, due to the impact of its price hike for new customers in April.
Netflix shares plummeted over 25 per cent in after-hours trading in what could wipe off as much as $6.8bn (£4.24bn) from Netflix’s market valuation when US markets open today.
In the third quarter to 30 September, Netflix said it added around 3m customers worldwide, below its forecast of 3.7m, to a total of 53.06m subscribers.
“The primary cause is the slightly higher prices we now have compared to a year ago. Slightly higher prices result in slightly less growth,” said Netflix.
“The effect of slightly higher prices is factored into our fourth quarter forecast.”
Profit during the quarter rose to $59.3m, up from $31.8m during the same period last year, while revenue rose 28 per cent to $1.41bn.
Next quarter, Netflix said it expected profits of $27m, almost half the $48m it reported during the same quarter last year.
Netflix’s shares traded as low as $332 during after-hours trading on Nasdaq.