Video-streaming service provider Netflix last night reported third-quarter US subscriber additions below its own forecast, blaming an ongoing transition to chip-based cards for the miss.
Shares of Netflix, known for its original shows such as "House of Cards" and "Orange is the New Black", plunged about 15% after the bell on Wall Street, before clawing back to trade down 2.4%.
US credit and debit card companies have been shifting to chip-enabled cards ahead of the October 1 deadline mandated for the switch.
For Netflix, the switch meant that many of the older cards on its file no longer worked as the companies gave new cards to their customers, leading to "involuntary churn," as chief executive Reed Hastings said.
Netflix said last night it added 0.88 million US subscribers in the third quarter ended September 30, compared with its forecast of 1.15 million.
The company increased the subscription rate for some new members earlier this month by $1 a month to $9.99 in the US, Canada and Latin America.
Internationally, Netflix added 2.74 million subscribers, compared with its projection of 2.40 million.
Netflix, which is also battling intense competition from other streaming services such as Amazon.com's Prime Video service and Hulu, has been aggressively building its overseas presence.
The company said it was in the "early stages" of its China entry and said it was "still learning a lot". Netflix said in July its plans to enter China in 2016 could be delayed.
The company is being more adventurous in terms of moving into news programming and was highly likely that it would be competing with Vice Media in the next two years, company executives said on a post-earnings conference call.
Vice Media is known for its current affairs coverage for young people.
Netflix forecast adding about 1.65 million customers in the US in the current quarter. It also said it expected to add about 3.50 million subscribers worldwide.
