Netflix shares plunge on poor subscriber growth
NETFLIX shares dived on Monday after the leading streaming television service said subscriber growth fell short of expectations in the recently ended quarter.
Membership in the quarter grew 5.2 million to a total of 130 million, matching the same period last year but a million shy of what Netflix had forecast, according to a letter released along with earnings figures.
Netflix shares dropped 14.11 per- cent to $343.97 in after-market trade, in a setback to the television juggernaut operating in some 190 markets worldwide.
“We had a strong but not stellar Q2 [second quarter],” Netflix said in a letter to shareholders.
“Earnings, margins, and revenue were all in-line with forecast and way up from the prior year.”
The Silicon Valley-based company said it is beginning to “lead artisti- cally” in some categories with its original content, earning enough Emmy nominations this year to break a 17-year top-spot streak by HBO.
Netflix said that it made a profit of $384 million on revenue of $3.9 billion in the recent quarter, compared to net income of $66 million on $2.8 billion in revenue in the same period last year.
Wall Street analysts had expected Netflix revenue to be slightly higher.
“After four consecutive quarters of beating its own guidance, and analysts’ expectations on key metrics such as revenues, profits, and subscriber gains, Netflix disappointed with a weak Q2,” said eMarketer principal analyst Paul Verna.
“This isn’t entirely surprising given rising competition in the video streaming market, where Amazon, Hulu, HBO and others are gaining share of subscription video dollars at Netflix’s expense,” Verna added.
Competition in the streaming television market includes YouTube, a platform under the umbrella of Google parent Alphabet, and entertainment titan Disney, along with AT&T.
Netflix has spent billions of dollars on original content, backing films or shows from creators from a gamut of countries and cultures as it strives for broad appeal as a global television service.