Netflix missed its subscriber addition projections for the first time in five quarters, leading shares to tumble more than 14 percent.
The company reported second-quarter earnings after the market closed on Monday. In addition to a slight miss on revenue compared to estimates, Netflix posted a huge miss on subscriber additions. The company only added 5.15 million subscribers, about one million less than forecast. Domestic additions were only a little more than half of its projections, while it just added 4.5 million subscribers internationally.
- Revenue: $3.91 billion vs. $3.94 billion estimated, according to a Thomson Reuters consensus estimate.
- Domestic subscriber additions: 670,000 vs. 1.23 million subscribers estimated, per FactSet and Street Account
- International subscriber additions: 4.47 million subscribers vs. 5.11 million subscribers estimated, per FactSet and Street Account
- Earnings per share (EPS): 85 cents (including $85 million in non-cash unrealized gain). It was not immediately clear if Netflix’s reported EPS was comparable with a Thomson Reuters consensus estimate of 79 cents.
Some analysts were worried the company could not sustain its share price growth, which is over 100 percent year-to-date. They also raised concerns as competitors like Amazon ramp up their streaming efforts, while others like Disney and AT&T are prepared to invest in more digital content. Netflix is expected to spend up to $8 billion this year on 700 original series.
Netflix also issued a weaker guidance for the third quarter than expected, saying it is expecting to add 5 million subscribers total compared to an analyst estimate of more than 6 million. It is projecting 650,000 new subscribers in the U.S. and 4.35 million internationally.
Correction: Netflix missed on revenue, reporting $3.91 billion vs. $3.94 billion expected. That distinction was misstated in a previous version of this story.
Source: Tech CNBC
Netflix plummets after missing big on subscriber growth