Netflix shares hit by exodus in subscribers

 
Kasmira Jefford
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NETFLIX shares plunged more than 26 per cent in after-hours trading last night after the DVD and online video streaming service said it lost more US subscribers than expected in the third quarter after imposing an unpopular price hike this summer.

The group said it had lost more than 800,000 subscribers – more than the approximately 600,000 it had forecast in September – and also predicted more cancellations in its video rental service this year.

Nevertheless third quarter earnings jumped more than 60 per cent to $1.16 a share, on a better-than-expected revenue up 49 per cent to $822m.

In a letter to shareholders accompanying the results, chief executive Reed Hastings said: “We are moving forward as quickly as we can to repair our reputation and return to growth.”

The company also forecast a loss for the first quarter of 2012 as it expands into Europe.

Netflix had earlier announced ambitious growth plans to bring its movie streaming business to the UK in early 2012. Customers will pay through a subscription model, although the group is yet to give details of its pricing and platform plans. Netflix closed up 1.54 per cent yesterday but shed 26.7 per cent in initial after-hours trading.