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Netflix Slumps as Q2 Earnings Miss, Weaker Q3 Subscriber Growth Forecast

Stock MarketsJul 16, 2020 04:26PM ET
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Netflix Earnings Miss, Revenue Beats In Q2

By Yasin Ebrahim

Investing.com - Shares of Netflix (NASDAQ:NFLX) plunged on Thursday as the streaming giant's second-quarter earnings fell short of estimates and it forecast lower-than-expected subscriber growth for the third quarter.

The company said that chief content officer Ted Sarandos would also become co-CEO.

Netflix was down more than 10% after the report.

Looking into the third quarter, Netflix said it expected to generate 2.5 million new subscribers, while Wall Street estimated 5.3 million, stoking worries about waning demand as competition heats up.

"In Q1 and Q2, we saw significant pull-forward of our underlying adoption leading to huge growth in the first half of this year (26 million paid net adds vs. prior year of 12 million). As a result, we expect less growth for the second half of 2020 compared to the prior year," Netflix said in a statement.

Netflix announced earnings per share of $1.59 on revenue of $6.15 billion. Analysts polled by Investing.com anticipated EPS of $1.82 on revenue of $6.09 billion.

The earnings beat was driven by a rise in the subscriber growth during the second quarter, as lockdown measures worldwide bolstered demand for streaming.

Subscriber numbers grew by 10.1 million during the three months that ended June 30, markedly above Wall Street estimates of net new subscribers of 8.26 million.

Looking ahead to the full year 2020, Netflix said it was still targeting a 16% operating margin.

"The problem is in the details. The company is now seeing a significant deceleration in this growth as it expects the initial boost from the pandemic to evaporate soon and things go back to normal.This projection is certainly negative for the stock which has to give up some gains and reflect this new reality," Investing.com analyst Haris Anwar said.

Netflix shares are up 62% from the beginning of the year, still down 8.31% from its 52-week high of $575.17 on July 13. They are outperforming the S&P 500 which is down 0.47% from the start of the year.

Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar

Netflix Slumps as Q2 Earnings Miss, Weaker Q3 Subscriber Growth Forecast
 

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Comments (8)
eddie glass
eddie glass Jul 16, 2020 8:59PM ET
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why would people pay for NFLX when you can pay the same price and get prime. i dont even like prime or netflix, but seems like amazon offers more bang for your buck if you are going to pay for a service like this.
eddie glass
eddie glass Jul 16, 2020 8:59PM ET
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if you like a show on NFLX you can just pay for the service one month out of the year and watch the series you like since they pump out all episodes of the new seasons once per year.
sam Ala
sam Ala Jul 16, 2020 8:12PM ET
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The whole market is driven by Fed scam. It is hard to think.my tax money is buying all these and zombie companies. The hierarchy CEO are the only ones who benefit from.the high stock.prices.The working class is wet in the rain with no coat.hmm. Fed free the rich with inflated stock prices.
Plopseven Schwartz
Plopseven Schwartz Jul 16, 2020 8:12PM ET
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We need a tax strike in the US. Corporations can pay taxes for the rest of us. They can afford it.
Berna Gonzalez
Berna Gonzalez Jul 16, 2020 6:59PM ET
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At this moment Disney+ is the one getting new subscriptions, Netflix is already mature, maturity curb in businesses are normal, they need to find a new way to profit out of their users base before reaching new goals
eddie glass
eddie glass Jul 16, 2020 6:11PM ET
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everybody pum.ped their money into over priced tech stocks and already netflix comes out of the gate with a miss. NETFLIX, the one thing people did during the mandatory lockdowns that should have done well
Plopseven Schwartz
Plopseven Schwartz Jul 16, 2020 6:11PM ET
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Subscription based service. You could watch 24 hours a day and it would make them as much money as if you watch an hour. They need new subscribers to be profitable, and their competition is numerous.
eddie glass
eddie glass Jul 16, 2020 6:11PM ET
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Plopseven Schwartz yes, and people got temporary subscriptions to watch sine series while they were forced to sit around at home for a few months
eddie glass
eddie glass Jul 16, 2020 6:11PM ET
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eddie glass
eddie glass Jul 16, 2020 6:11PM ET
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Plopseven Schwartz there is no ongoing driving force to keep an influx of new subscribers. and as you pointed out they are trying to compete with prime for instance which is trying to include some original content
Gamer Turtle
GamerTurtle Jul 16, 2020 4:44PM ET
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subscription will drop as businesses reopen. its valuation makes no sense as stock market should be forward looking.
eddie glass
eddie glass Jul 16, 2020 4:44PM ET
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the stock market has not been forward looking since the fed decided that the USD was a toy that they could play with to manipulate the stock market
Olubodun Akintomiwa
Olubodun Akintomiwa Jul 16, 2020 4:35PM ET
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whao
Chopin Liszt
Chopin Liszt Jul 16, 2020 4:33PM ET
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500 dollar for a fake stock... worse than tesla... crazy ppl deserve to lose money
Elvis Durant
Elvis Durant Jul 16, 2020 4:33PM ET
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AGREED! No BRAINS!
Matthew Mover
Matthew Mover Jul 16, 2020 4:28PM ET
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Who would have thought! People are tired of being inside, they are out driving/traveling and enjoying the sun and freshair! This was easy to predict.
Morpheus Anderson
Morpheus Anderson Jul 16, 2020 4:28PM ET
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But I like to enjoy the sun, fresh air and Netflix at the same time!! Lmao
Elvis Durant
Elvis Durant Jul 16, 2020 4:28PM ET
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Not a lot Happening on NTFLix. Come back in December
 
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