Netflix shares tank after subscriber numbers miss targets

Netflix shares tank after subscriber numbers miss targets

The shares plunged as much as 15 percent after Netflix said it added 5.2 million users in the period, about a million fewer than it predicted.

The streaming giant reported overall membership growth was 5.2 million - the same as the second quarter past year - but was lower than its forecast of 6.2 million.

Wall Street analysts had expected Netflix revenue to be slightly higher.

Netflix had an average of 124.4 million paying subscribers in the quarter, up from 118.9 million in the first quarter but below its guidance of 125 million.

Netflix shares dropped 14.11 per cent to US$343.97 in after-market trade, in a setback to the television juggernaut operating in some 190 markets around the world. Global revenue for the recent quarter is US$1,921 million, compared to US$1,165 million in 2017.

It signed up 4.47 million subscribers internationally, while analysts were expecting 4.97 million.

Analyst Daniel Ives at GB Insights was quoted by The Guardian as describing the subscriber shortfall as a "near-term gut punch" to the Netflix bull thesis. "As of June 30, Netflix had 130 million subscribers, including 57.4 million in the U.S".

Deutsche Bank downgraded Netflix to Hold from Buy, saying that the subscriber number miss was not cause for alarm, but was a reason to reconsider the stock's soaring valuation.

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In a letter to shareholders, Netflix said it had a "a strong but not stellar" second quarter.

Netflix also fell short when it came to revenue predictions.

For the current quarter, the company is projecting revenue of $3.988 billion, below the consensus for $4.126 billion. "In addition to succeeding commercially, we are starting to lead artistically in some categories, with our creators earning enough Emmy nominations this year to collectively break HBO's awesome 17-year run".

Going forward, "We anticipate more competition from the combined AT&T/WarnerMedia, from the combined Fox/Disney or Fox/Comcast as well as from worldwide players like Germany's ProSieben and Salto in France", the company said in the investor letter.

Netflix cited an array of competitors, starting with YouTube.

He added the expectation that despite the weaker-than-expected results, the company was expected to continue to be the leading video streaming service across the US.

"Our strategy is to simply keep improving", the company stated.

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