Netflix shares plummet after company reveals disappointing subscriber growth

Netflix shares plummet after company reveals disappointing subscriber growth

After five straight quarters of meeting or exceeding analyst expectations for subscriber growth, Netflix finally fell short, disappointing Wall Street.

Subscription numbers are one of the most closely watched metrics for Netflix, and Daniel Ives, a technology analyst at GBH Inisights, said the miss was concerning.

The California-based company added 670,000 net subscribers in the US, far below the 1.19 million net additions expected by analysts polled by Thomson Reuters. Domestic streaming net additions are projected at 650,000, below the average estimate for 953,000. Analysts were expecting 6.3 million - 1.2 million in the United States and 5.1 million internationally, according to Bloomberg.

Today Netflix reported their 2nd quarter 2018 numbers.

Netflix said it made a profit of $384m on revenue of $3.9 billion in the recent quarter, compared to net income of $66m on $2.8bn in revenue in the same period a year ago. Over the previous eight quarters, the company has on average topped its total net subscriber addition guidance by about 1 million, with three-quarters of that coming from global markets, according to Wedbush Securities analyst Michael Pachter.

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

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

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

Still, Netflix ended Q2 with 130.1 million global subs, up 25% year over year, with 56 million in the USA and 72.8 million elsewhere.

AT&T just bought Time Warner for $81 billion in a deal that includes HBO - a pay TV and video streaming service that AT&T plans to expand in an attempt to lure more viewers away from Netflix. In the second quarter past year, Netflix posted $2.79 billion in sales. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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