Netflix shares dropped overnight after the streaming service reported disappointing subscriber growth for the first quarter, compounding this with a forecast below Wall Street estimates.

From January through March, Netflix added 1.75 million streaming subscribers, missing Wall Street forecasts of 2.06 million additions.

For the current quarter, the streaming giant forecast A$12.24 billion in revenue – lower than analysts’ projections of A$12.6 billion.

Shares plummets by as much as 7 per cent overnight, clawing back before close.

The slow start to the calendar year is likely to correct in the back half of the year, as the company cracks down further on password sharing. Netflix started the crackdown in 12 countries in February, the result of which will start to be seen – moreso when it adds larger markets to its password sharing shutdown.

The crackdown hits the US this quarter, according to an earlier shareholder letter, which noted that 100 million households are sharing passwords, including about 30 million households in the U.S. and Canada.

“We believe it will result in a better outcome for our members and our business,” the company said, noting that it was “on track to meet our full year 2023 financial objectives.”