Netflix Earnings: Stock Tanks on Weak Subscriber Adds

Lloyd Doyle
July 17, 2018

Netflix came up well short of subscriber-growth targets for the second quarter of 2018 - sending the streamer's stock down more than 14% in after-hours trading Monday on fears its pace of expansion is slowing down. In second quarter previous year, Netflix posted $2.79 billion in sales.

Analysts had been modeling $3.94 billion in revenue and EPS of 79 cents.

All told, Netflix over the last three months added 670,000 new subscribers in the United States and 4.47 million new subscribers overseas.

The online streaming giant's shares have soared 115pc since the start of the year, helping it leapfrog Disney to become the most valuable media company in the world. Global subscriber growth also fell far short, as Netflix added 4.47 million against an expected 4.97 million. Analysts were expecting 6.3 million - 1.2 million in the USA and 5.1 million internationally, according to Bloomberg.

Netflix also provided third quarter guidance that was below analyst forecasts.

Netflix is facing growing competition from global tech rivals and traditional providers
Image Netflix is facing growing competition from global tech rivals and traditional providers

The burn is all part of Netflix's heavy investment in original content and top Hollywood talent.

For the current quarter, the company is projecting revenue of $3.988 billion, below the consensus for $4.126 billion.

Chief Executive Reed Hastings, in a letter to shareholders, called it a "strong but not stellar Q2". "Internet video is growing globally and we are fortunate to be one of the leaders".

Looking ahead to the next quarter, Netflix is already anticipating additional challenges to subscriber growth. "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".

Other reports by Iphone Fresh

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