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Netflix Slumps as Subscriber Numbers Fall Short

Stock MarketsJul 17, 2019 04:01PM ET
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Investing.com - 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 $4.93 billion.

Netflix fell more than 12% in aftermarket hours.

The earnings miss was driven by slowing global subscriber numbers, the company's main growth driver. Global subs 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. Domestic paid subscriber fell by 126,000, compared with expectations of a gain of 352,000.

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."

With the streaming wars gathering pace following launch of streaming services by rivals such as Walt Disney (NYSE:DIS), Netflix allayed fears of a further slowdown in subscriber growth, touting an improvement in the third quarter.

"While our U.S. paid membership was essentially flat in Q2, we expect it to return to more typical growth in Q3, and are seeing that in these early weeks of Q3. We forecast Q3 global paid net adds of 7.0m, up vs. 6.1m in Q3’18, with 0.8m in the US and 6.2m internationally," Netflix added.

Netflix Slumps as Subscriber Numbers Fall Short
 

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Comments (5)
Barry Lawhorn
Barry Lawhorn Jul 18, 2019 7:43AM ET
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could be subscribers got tired of their politics and canceled the service. Posts on social media had alot saying they canceling because of them and Georgia.
Michael Angelo
Michael Angelo Jul 17, 2019 9:25PM ET
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Looks that the bullet proof consumer has it limits. Price and quality has it limits. Even with all the cnbc and networks support Netflix has met competition. Time to work in costs and cashflows.Brad what happened?
Scott Killips
Scott Killips Jul 17, 2019 5:17PM ET
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price increase
ATOMIQ ILYA
ATOMIQ ILYA Jul 17, 2019 5:02PM ET
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Btfd!
Brad Studio
Brad Studio Jul 17, 2019 4:48PM ET
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When you raise rates, hire a bunch of treasonous deepstate operatives and push borderline child ***content; what did you think would happen? As soon as Obamas got involved, large numbers of subcribers cancelled. Liberals will torch everything they get their paws on. History repeats without fail, everytime.
 
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