Netflix Slumps as Subscriber Numbers Fall Short
Shares of Netflix (NFLX) plunged late Wednesday after the streaming giant missed both subscriber growth and revenue forecasts for the second quarter.
Netflix (NASDAQ:NFLX) reported earnings of 60 cents share beating expectations from Investing.com for 56 cents per share. But revenue of $4.92 billion was slightly below estimates of $4.93billion.
Netflix fell more than 11% in aftermarket hours.
The earnings miss was driven by slowing global subscriber growth, the growth driver for the company, which fell short of analysts' estimates.
Global subscriber numbers grew by 2.7 million missing expectations of 5 million for the quarter. That was also below with company's guidance in April for 4.7 million international subscribers.
The company said competition was not a factor behind its weaker subscriber additions in the quarter, blaming the miss on regions where it increased the price of streaming service. It also said that the content released during the second quarter had generated weaker-than-expected subscriber additions.
"Our missed forecast was across all regions, but slightly more so in regions with price increases," Netflix said. "We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region)."
"Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated. Additionally, Q1 was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized. In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business served us well."