Netflix shares dive as subscriber growth falls short

Netflix Inc. stunned Wall Street by attracting fewer subscribers than expected last

Netflix Inc. stunned Wall Street by attracting fewer subscribers than expected last

Shares in Netflix plunged by more than 14pc in after-hours trading, after it missed analyst expectations for subscriber growth by more than one million users, in what it called a "strong but not stellar" quarter. The company expected to hit 5.11 million subscribers globally and 1.23 million subscribers domestically, but it actually hit 4.5 million and 700,000, respectively. This Q2, we over-forecasted global net additions which amounted to 5.2m vs. a forecast of 6.2m and flat compared to Q2 a year ago, as acquisition growth was slightly lower than we projected.

Membership in the quarter grew 5.2 million to a total of 130m, matching the same period previous year but a million shy of what Netflix forecast, according to a letter released along with earnings figures.

Netflix also provided third quarter guidance that was below analyst forecasts. That's compared with analyst estimates that Netflix would have Q3 net adds of 947,000 in the US and 5.05 million internationally.

The company reported quarterly revenue of $3.91 billion and earnings per share of 85 cents.

Revenue for the quarter came in at $3.91 billion, lower than the $3.94 billion analyst estimate.

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The company said it added 670,000 streaming customers in the US, below its guidance of 1.2 million new subscribers.

The good news is Netflix did see a 43% increase in streaming revenue likely from the higher subscriber numbers and new price increase.

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

We were honored last week with the most Emmy nominations of any network.

Netflix cited an array of competitors, starting with YouTube. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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