Netflix Plunges Over 20% on Huge Miss on Subscribers: Q1 Earnings Report

Following a mixed first-quarter results announcement, Netflix's stock plummeted in after-hours trade.

During today's cash session, investors were upbeat, propelling shares up over 3% until the closing bell. The streaming behemoth earned $3.53 per share, topping the $2.90 average estimate from Bloomberg. This was based on sales of $7.8 billion, which fell short of expectations.

As typically, the true meat of this report is subscriber growth and future forecasts. Netflix lost 200,000 customers in the first quarter, much less than the 2.5 million forecasted for the fourth quarter. 

The sobering statistic comes after the corporation halted operations in Russia as a result of Putin's invasion of Ukraine. A recent price increase also drove off subscribers. Some experts feared that a price increase in the face of rising inflation would place too much of a strain on prospective consumers, and those worries seem to be justified.

Netflix expects a net loss of -2 million customers in the second quarter, which has traditionally been a slow time for the company. The street had been expecting subscriber guidance of approximately 2.5 million, so this was a significant disappointment. In the face of such bleak predictions, the mega-hit program Stranger Things, which is set to premiere late next month, provides little solace.

Operating margin, a crucial metric for investors, again fell short of expectations, coming in at 21.5 percent vs. 21.6 percent. Password sharing, which is estimated to number in the hundreds of millions, has been identified as a barrier to expansion.