Netflix reports slowing subscriber growth
NETFLIX SHARES fell 14 per cent in extended trading, after the company reported slowing growth in subscriber numbers.
The company gained 5.1 million subscribers worldwide during the April-June quarter, more than one million below the number that management had believed it could add.
It marked the first time in more than a year that Netflix had not exceeded its subscriber growth projections.
As of June 30, Netflix had 130 million subscribers, including 57.4 million in the US.
It has renewed fears that its growth may ease as the video streaming service tries to fend off fierce competition.
The latest numbers are a rare letdown for a company that has enjoyed a positive reaction from investors, due to its ability to consistently top expectations. But Netflix missed its target badly in the April-June period, causing its high-flying stock to plummet by about 14 per cent to $345.63 (£261.049) in extended trading.
The shares had more than doubled before the sell-off.
If the stock continue to plunges on the same trajectory, it will be the steepest drop in nearly four years.
Netflix predicted it would add five million subscribers in the current quarter, which ends in September, slightly slower than the pace a year ago.
Despite the prospect of rivals with the market clout of Disney moving into streaming, Netflix remains bullish about is prospects. “We believe that consumer appetite for great content is broad and that there is room for multiple parties to have attractive offerings,” it said in a statement.
GBH Insights analyst Daniel Ives called the second-quarter showing “a near-term gut punch” to Netflix.
The spring and summer months traditionally mark Netflix’s most sluggish period as people go on holiday and spend time outside.
However, the company still reported earnings that beat analyst estimates. Earnings grew 32 per cent from last year to $384 million (£290 million) Revenue climbed six per cent to $3.9 billion (£2.95 billion).
Bringing in more subscribers and money is vital for Netflix because it expects to keep spending more on exclusive TV shows and movies to try to stand out from rivals.
There is room for multiple parties to have attractive offerings Netflix’s response to the growing pressure from rival streaming services.