Netflix Inc shattered hopes for a speedy recovery on Thursday by expecting dismal first-quarter subscriber growth, sending shares down nearly 20 per cent and wiping out most of the company’s remaining gains made during the pandemic in 2020.

According to Refinitiv IBES statistics, the world’s largest streaming service expected to attract 2.5 million members from January to March, less than half of the 5.9 million analysts had predicted.

Netflix has lowered its growth forecasts, citing the late release of highly anticipated programming such as the second season of “Bridgerton” and Ryan Reynolds’ time-travel film “The Adam Project.”

In after-hours trading, Netflix’s stock dropped over 20% to $408.13. Walt Disney Co., which is focusing on creating a strong streaming business, saw its stock drop 4%. Roku Inc, a company that makes streaming devices, has experienced a drop in its stock price.

Nasdaq futures fell about 1 per cent, indicating that traders expect the technology-heavy index to open lower on Friday.

Between October and December, Netflix attracted 8.3 million new subscribers, thanks to a slew of new programming that included the star-studded films “Red Notice” and “Don’t Look Up,” as well as a new season of “The Witcher.” Analysts had predicted a total of 8.4 million.

At the end of 2021, the firm had 221.8 million global subscribers.

Netflix noted in a letter to shareholders that the ongoing Covid-19 pandemic, as well as economic challenges in certain parts of the world, such as Latin America, may have prevented growth in the number of subscribers from returning to pre-pandemic levels.

Company’s Co-Chief Executive Ted Sarandos said in a post-earnings video interview that Covid-19 “created a lot of bumpiness” that made it hard to project subscriber numbers, “but all the fundamentals of the business are pretty solid.”

Analyst average projections of 82 cents were smashed by the company’s adjusted earnings per share of $1.33. Revenue came in at $7.71 billion, which was in line with expectations.

Netflix boosted rates in its biggest market, the United States and Canada, last week, and is now seeking for growth elsewhere, according to analysts.

During the pandemic, the company saw a roller coaster ride, with rapid growth early in 2020 when people stayed at home and movie theatres were shuttered, followed by a slump in 2021. In 2020, Netflix had more than 36 million subscribers and 18.2 million in 2021.

Netflix’s subscriber growth in 2022 was predicted to stabilize and return to its pre-pandemic pace of 27.9 million new customers in 2019, according to analysts.

New episodes of “Ozark” and “Stranger Things” are on the way, as well as a three-part Kanye West documentary.

“The pandemic lockdowns pulled forward tons of demand and it is taking longer than expected to normalize,” said Pivotal Research analyst Jeff Wlodarczak.

Rivals such as Disney and AT&T Inc’s HBO Max are investing billions in new programs in order to get a piece of the streaming market.

Netflix said that competition “may be impacting our marginal growth,” but stated it was still increasing in every nation where new streaming options were introduced.

“Even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world,” Netflix said in its shareholder letter.

(Adapted from RTE.ie)