Netflix posted extremely disappointing earnings on April 19, revealing it lost 200,000 paid subscribers in the first quarter, which triggered the stock to drop 27% to a three-year low in pre-market trading April 20.

                By                    Yaёl Bizouati-Kennedy

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In a letter to shareholders, Netflix acknowledged that its revenue growth has slowed considerably as its relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds.

The decrease of 200,000 subscribers comes against the company’s guidance forecast of an addition of 2.5 million and a 4 million addition in the same quarter a year ago, according to the letter. In addition, the company said it forecast a loss of 2 million subscribers in the second quarter, compared to the 1.5 million it added in the same quarter last year. The suspension of its service in Russia and winding-down of all Russian paid memberships affected the number of users as well.

Increased competition from other streaming services along with the launch of new platforms has also added pressure on the company.

“Over the last three years, as traditional entertainment companies realized streaming is the future, many new streaming services have also launched. While our U.S. television viewing share, for example, has been steady to up according to Nielsen, we want to grow that share faster,” according to the letter.

Co-Chief Executive Reed Hastings said in an earnings call that the company is working on how to monetize sharing.

“We’ve been thinking about that for a couple of years. But when we were growing fast, it wasn’t the high priority to work on. And now, we’re working super hard on it. And remember, these are over 100 million households that already are choosing to view Netflix. They love the service. We just got to get paid at some degree for them,” he said, according to the transcript of the call.

“Since Netflix is the only pure-play publicly-traded stock of the lot it will continue to fall. At least the other ones have businesses besides online streaming on which they can rely,” he added.

Jeff Wlodarczak, an analyst for Pivotal Research Group, cut his rating on the stock from “buy” to “sell” and chopped his 12-month price target by almost 60%, to $235 per share, according to Variety.

“After what can only be called a shocking 1Q subscriber miss and weak subscriber and financial guidance we reduced our subscriber forecasts and pushed back our profitability forecasts substantially,” Wlodarczak wrote in a note to clients.