Netflix, the leading streaming video service, saw its shares plunge 35% Wednesday after it announced its first quarterly decline in subscribers due to the war in Ukraine.
For the first quarter of 2022, Netflix reported 221.64 million subscribers, down 200,000 from the last quarter. Netflix stopped service to Russia after the war with Ukraine started in February, causing the company to lose 700,000 Russian subscribers.
The company still remains very profitable with first quarter revenues of $7.8 billion and net income of $1.59 billion but is forecasting a loss of 2 million more subscribers in the second quarter.
Netflix is blaming password sharing as a big problem in slowing subscriber growth. The company believes 100 million households are sharing passwords with over 30 million in the United States and Canada. The company says it is testing solutions to get password sharers to convert to paid membership.
The company also cites increased streaming competition, the war in Ukraine and increased inflation affecting subscriber growth.
Apple TV+ has become a growing competitor in the streaming market with its recent Academy Awards victory for the movie CODA which won Best Picture along with Ted Lasso which won the Emmy Award for Outstanding Comedy Series in 2021.
Shares in Netflix have dropped 65% since the beginning of the year. Netflix stock closed at $226.19 on Wednesday and had a 52-week high of $700 in November 17, 2021