Netflix plunges due to slow subscriber growth


Netflix plunges due to slow subscriber growth

Andrew Cummings
July 17, 2018

Netflix shares dropped 14.11 percent to $343.97 in after-market trade, in a setback to the television juggernaut operating in some 190 markets around the world.

Netflix executives expressed little concern on a call with analysts and investors, insisting their growth over the past 12 months has still exceeded expectations.

SAN FRANCISCO Netflix is adding subscribers at a slower pace than envisioned, renewing fears that its growth may sputter as the video streaming service tries to fend off fiercer competition.

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. Earnings grew 32 percent from previous year to $384 million, or 85 cents per share.


Netflix's stock got hammered after the bell after reporting that it added far fewer subscribers in the second quarter than Wall Street was expecting - and warned of another subscriber shortfall to come in the third quarter.

Netflix posted its earnings report for the June quarter today and revealed that it added 5.15 million subscribers for the quarter.

It signed up 4.47 million subscribers internationally, while analysts were expecting 4.97 million.

For the current quarter, the company is projecting revenue of $3.988 billion, below the consensus for $4.126 billion. Earnings amounted to 85 cents a share, topping the 79-cent estimate of analysts.


"We had a strong but not stellar Q2", Netflix said in a quarterly letter to shareholders. While most of the company's revenue growth comes from worldwide markets, the vast majority of its costs remain dollar-denominated.

Netflix has been paying up big time for its content. Netflix said Monday that it expects content expenses to hit $8 billion this year.

The Silicon Valley based company noted that it is beginning to "lead artistically" in some categories with its original content, earning enough Emmy nominations this year to break a 17-year top-spot streak by HBO.

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.


"Our strategy is to simply keep improving", Netflix said.

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