SAN FRANCISCO - Netflix's (NFLX) subscriber growth in the latest quarter lagged management's forecast as the Internet video service's recent price increases turned off potential new viewers.
The disappointing performance announced Wednesday spooked investors already on edge after Time Warner's (TWX) HBO cable channel announced plans to compete against Netflix by offering an Internet-only package in the U.S beginning next year.
In after-hours trading Wednesday, Netflix's stock plunged $115, or 25.6 percent, to $334.
The service gained about 3 million subscribers worldwide during the three months ending in September, well short of Netflix's own prediction that it would add about 3.7 million customers in the period.
Netflix CEO Reed Hasting blamed most of the shortfall on a price increase of roughly a $1 per month that kicked in during May. The increase boosted Netflix's U.S. price to $9 per month.
The shares got pounded despite Netflix also reporting on Wednesday that its third-quarter net income was $59.3 million. On a per-share basis, the Los Gatos, Calif.-based company said it had net income of 96 cents.
The results exceeded Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 93 cents per share.
Netflix posted revenue of $1.41 billion in the period, which matched Street forecasts.