Netflix slumps as subscriber levels dismay

NETFLIX saw shares plunge 16 per cent after US markets closed last night as it revealed it had signed up far fewer customers than had been expected.

The company, which offers movie streaming over the internet or DVD by post to subscribers, said it expects to have 27m users by the end of 2012, around 1.7m below what chief executive Reed Hastings had predicted earlier in the year.

“Subscriber numbers were lower than expected, and the guidance for full year was lower than expected too,” said Arvind Bhatia, an analyst at brokerage Sterne, Agee & Leach.

The results sent Netflix shares down from $68.22 to $57.35 in after-hours trading, despite the company beating profit forecasts. Revenue in the third quarter reached $905m (£567m), up 10 per cent on last year, but profit was just $8m compared with last year’s $62m.

Netflix has sacrificed profits as it expands into new countries, including a UK launch this year.