Netflix is bleeding subscribers for the first time in over a decade — and it's expecting to lose another 2 million subscribers in coming months

• Netflix posted a net loss of subscribers for the first time in over a decade.
• The streaming giant last reported subscriber losses in 2011.

Netflix's earnings report revealed subscriber losses for the first time in over a decade.

The earnings miss sent the stock plummeting 21% in after-hours trading as Wall Street reacted to Netflix losing 200,000 subscribers in the first quarter and predicting further losses in the second quarter.

The last time the streaming giant posted a subscriber loss was 2011.

In Netflix's letter to shareholders, the company projected that it could lose two million subscribers next quarter. The letter described "revenue growth headwinds" in the form of a "relatively high household penetration" and growing competition. The company also recently raised its prices in the US and Canada.

"The big COVID boost to streaming obscured the picture until recently," said the letter.

Netflix experienced a viewership boom when the pandemic first hit, grabbing the attention of viewers sequestering at home with docuseries such as "Tiger King." But as the world reopens and competitors from Disney+ to HBO Max continue to elbow for subscriber dollars, Netflix is beginning to reexamine what could be weighing on subscriber growth.

"COVID clouded the picture by significantly increasing our growth in 2020, leading us to believe that most of our slowing growth in 2021 was due to the COVID pull forward," the company said in the letter.

Netflix cited four main challenges hampering the streamer: the impact of connected TVs and other technology on the pace of growth of its addressable market; mass password sharing; increased competition from new streaming services; and macroeconomic factors such as inflation and geopolitical conflict.

The subscriber losses give a clearer picture of why Netflix recently began to test ways to crack down on password sharing. The company revealed in its shareholder letter that it estimates its service is being shared with 100 million freeloading households, including 30 million in the US and Canada.

"Sharing likely helped fuel our growth by getting more people using and enjoying Netflix," the company said in the letter. Netflix is currently trying out new paid sharing features in Latin America and said it will focus on finding ways to monetize those freeloading households.

The ongoing Russia-Ukraine War also had an impact on Netflix's business. The company said that it saw a slowdown in its EMEA market that coincided with Russia's invasion of Ukraine, and its decision to suspend service in Russia resulted in a 700,000 impact on paid net subscribers during the quarter.