Shares in Netflix dipped this week after it revealed that it has fewer subscribers than forecast.
The video streaming firm reported a third-quarter profit of $59 million, up from $32 million a year ago.
But the company failed to attract as many new subscribers as it had predicted, calling it “over-forecasted” on membership growth.
Netflix signed up 3.02m customers globally in the third quarter, compared to the 3.69m it had expected in July.
News of the slow growth, mainly in its US market, sent its shares plummeting as much as 27% on the Nasdaq index.
The company blamed a $1(£0.62) price rise to $8.99 for its monthly service fee for fewer new subscribers.
We over-forecasted membership growth,” Netflix said in a letter to its shareholders. The company added just one million new members in the US, with an additional two million coming from international markets. In all, Netflix now has 53.06 million members in both domestic and international markets.
Netflix attributes the miss to new prices and the fading of the positive reaction to its hit series “Orange is the New Black” before the third quarter. “As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago. Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US,” the company said.
Its stock lost more than $117 to $331 in after-hours trading from its close of $448.59.
Netflix operates in nearly 50 countries, but the US is its biggest market. Its growth in customers there fell 24% in the third quarter from a year ago to 980,000.
The company’s slowing growth figures came on the same day as rival Time Warner’s HBO announced that it will launch an online streaming service in the US starting next year.
Netflix shrugged off concerns of competition intensifying from HBO saying that there is enough room in the market for customers to use both services.
“It is likely we both prosper as consumers move to Internet TV,” Netflix said in a statement.
The online streaming giant has invested in several new original shows and more recently original movies like the sequel to Oscar-winning martial-arts film “Crouching Tiger, Hidden Dragon” in an effort to maintain its position.