Netflix (NFLX) is thinking global but needs to act more local to realize its full potential, analysts said after the company’s subscriber forecasts came up short of expectations.
The video streaming pioneer launched its service in almost every country in the world in January, further boosting investors’ expectations about the company’s growth prospects.
The weak subscriber forecast underscores the troubles Netflix is grappling with as it adapts the service to different markets and cultures.
The company’s high-flying stock, up by a third in the past year, fell 7 percent to $100.46 in premarket trading on Tuesday.
“We believe this highlights the increasing challenges facing the company as it expands into more non-English speaking countries and countries with more localized content,” said Mizuho analyst Neil Doshi, who rates the stock “neutral.”
At least seven brokerages, including Mizuho, lowered their target price on the stock.
Baird was the most bearish, cutting its price target to $108 from $115. The median price target on the stock is $125.
Netflix is offered in only 21 languages, compared with YouTube’s 50, and payment options limited to international credit cards, J.P. Morgan Securities analysts said.
The brokerage added that Netflix needs to add more local languages, content and payment options in the coming quarters.
Pacific Crest lowered its 2016 global net subscriber addition forecast to 18.7 million from 21.5 million.
“The reductions reflect heightened seasonality and lower incremental adoption, as local content and marketing are being phased in more slowly than previously anticipated,” Pacific Crest analyst Andy Hargreaves wrote in a note to clients.
The company, whose original shows include “Orange is the New Black” and “House of Cards,” is also facing increased competition in its home market from the likes of Amazon.com Inc and Hulu.
Amazon announced on Monday it would offer its video streaming service as a standalone monthly subscription as it looks to drive membership in its Prime subscription service.
Wedbush analyst Michael Pachter, one of the few analysts with a “sell” or “underperform” rating on Netflix, said Amazon’s move could spell trouble for the video streaming company.
“Amazon Video will up the ante for acquiring new content. This creates a double-whammy for Netflix-higher content spend and slowing subscriber growth,” Pachter said.