• The streaming service said Tuesday it added 3.98 million subscribers in the first quarter of 2021, missing Wall Street’s estimate of 6.29 million and its own forecast of 6 million. The current quarter will be challenging too, with Netflix predicting 1 million new customers, far below the 4.44 million projected by analysts.
• See details here.

Key insights

• Netflix has been warning for months that growth would slow in early 2021 because so many people signed up for its streaming service last year, when Covid-19 lockdowns led to a surge in subscriptions. The first quarter of 2020 was the strongest in company history, with 15.8 million new customers. The latest three months, in contrast, marked the slowest first quarter since 2013, when Netflix added 4.95 million customers.
• The company’s output of new shows slowed in the first quarter due to fallout from the pandemic, which led to production delays. Netflix was able to sustain its release schedule for the first several months of the pandemic because it had already finished production on many shows. But movies and programs that were supposed to be in production last March, April and May had to stop, leading to the current shortfall.
• All of that coincided with a stiffening of competition in streaming, from Disney+, HBO Max and Apple TV+ to newer entrants like Discovery+ and Paramount+. Some are less expensive than Netflix, which raised its U.S. prices in October.
• Europe continues to be a bright spot for Netflix. The streaming service added 1.81 million customers across Europe, the Middle East and Africa, leading the company. “Lupin,” a French heist thriller, was the service’s most popular new series in the quarter.

Market reaction

• Netflix fell as much as 13% to $480 in extended trading after the results were announced. The stock has risen 1.6% this year through the close Tuesday in New York.