Netflix shares plummet following failure to meet subscriber forecast

Share prices of online streaming service Netflix tumbled last night, after it was revealed that the company attracted fewer new customers than was expected.

Netflix added just 1.2 million new US customers in Q3 2012, making for a total of 25.1 million subscribers - nearly 2 million users short of what Wall Street analysts had predicted. The release of the disappointing figures was reflected in the stock market, with the company's shares falling 15 per cent to $58.04 (£36.22) in after-hours trading.

"Subscriber numbers were lower than expected, and the guidance for full year [customers] was lower than expected too. The streaming numbers don't look that great," said Arvind Bhatia, an analyst at Sterne, Agee & Leach.

Netflix CEO Reed Hastings - who recently left the Microsoft board to focus on Netflix and his work in the education sector - said the company inaccurately predicted the gains it would make this year in terms of new subscribers. He also insisted that the firm is "tired of making excuses" and plans to restore its former glory.

"We're continuing to work very hard and look forward to being in a better place relative to our guidance a quarter from now. It doesn't feel great to come in at a lower half but it is what it is," said Hastings.

Netflix is now on track to end the year with five million additional US streaming subscribers, up 20 per cent from the year before. In addition, the company's overseas investments appear to be starting to take shape, with Netflix announcing in August that it hit 1 million members in the UK and Ireland in just seven months. The firm now also boasts more than a million users in Latin America, while Scandinavia is another region targeted for growth.

Overall, Netflix has added 690,000 customers in foreign markets, bringing its total non-US subscriber base to 4.3 million - triple what it was in 2011.

"It will take longer than we had planned to get to profitability in Latin America, but we are confident that this will be a very large and profitable market for us in the long term", added Hastings.