Netflix stock dives after subscriber numbers hit by price increase

Netflix stock plunged 23 per cent in after-hours trading on Wednesday after it reported weaker-than-expected new subscriber numbers for itsvideo streaming.

The company is blaming its higher price for new subscribers for keeping numbers low. The company announced in may that new subscribers would pay $1 more for their subscription $8.99 a month, while existing subscribers would continue to pay $7.99 a month.

We over-forecasted membership growth, Netflix said in a letter to its shareholders. The company added that it added 980,000 new members in the U.S. during its third quarter, which was down from 1.3 million such additions in the same period a year ago.

The disappointing performance announced Wednesday spooked investors already on edge after Time Warner Inc.'s HBO channel announced plans to compete against Netflix by offering an internet-only package in the U.S. beginning next year.

Netflix earnings came in above expectations. Its third-quarter net income was $59.3 million or 96 cents a share.

The internet video service posted revenue of $1.41 billion in the period.

Netflix shares had risen 22 per cent since the beginning of the year, but were down $103 at $345 at 5.30 p.m. ET.