Netflix Shares Fall After Streaming Service Reports Lower Than Expected Subscriber Numbers

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

The California-based company added 670,000 net subscribers in the USA, far below the 1.19 million net additions expected by analysts polled by Thomson Reuters.

Despite its massive push into content, Netflix has still missed its membership growth forecast of 6.2 million for the second quarter of 2018 (Q2 18), witnessing only a 5.2 million growth to 130 million memberships.

While Wall Street remains overwhelmingly positive on Netflix and its role in video streaming globally, the numbers did raise question marks over future growth.

It is a crucial measurement for investors as subscriptions are key to funding the company's investment in its own TV shows and movies, which is expected to hit $8bn (£6bn) this year alone.

The company's shares fell more than 13 percent shortly after the start of trading on Tuesday before rebounding, with the stock trading down almost 6 percent as of 2:40 p.m. It brought in $3.91 billion in Q2 but was expected to earn $3.94 billion. Worldwide subscriber net additions are projected at 4.35 million, again, below the average 5.095 million. Meanwhile, US streaming revenue amounted to US$1,893 million, compared to US$1,505 million during the same period past year.

There seems to be a number of things at play, most of which could have negative impacts on the progress of Netflix. Its total base of 57 million subscribers in the US dwarfs Hulu's 20 million users and HBO's 5 million.

All told, Netflix now boasts upwards of 130 million subscribers across the globe. Revenue climbed 6 percent to $3.9 billion. However, the company took the opportunity to brag about overtaking HBO in the Emmy nomination race this year, breaking the latter's 17-year run. Revenue, meanwhile, totaled $3.91 billion, also falling short of analyst expectations. Disney is selling an internet version of its sports network ESPN and plans to introduce a general entertainment video service next year.

"Right now, Netflix is still miles ahead of its closest competitor, but there is going to be a giant bulls-eye on Netflix's back during the next 18 to 24 months", Ives predicted in an interview. "Our strategy is to simply keep improving, as we've been doing every year", the company said.


Popular
  • Wimbledon: Novak Djokovic into first semi-final since 2015

    Wimbledon: Novak Djokovic into first semi-final since 2015

    But Federer went toe to toe with his buoyant opponent in an epic fifth-set tussle until with the score 11-11 Anderson pounced. Djokovic is a three-time victor at Wimbledon , having won the title in 2011, 2014 and 2015. "I think that's not fair".
    Brazil's Tite to face Should-I-Stay-or-Should-I-go decision

    Brazil's Tite to face Should-I-Stay-or-Should-I-go decision

    Belgium's shape-shifting also leaves Deschamps guessing as to how Belgium will set up in another match it won't be fovoured to win.
    It’s on: US, China tariffs take effect in new trade war

    It’s on: US, China tariffs take effect in new trade war

    Gao said China would not bow to threats or blackmail and would have to fight back if the USA went ahead and imposed the tariffs . Part of his plan is to radically change how United States trade deals work and to focus on protecting the domestic economy.
  • Sacha Baron Cohen delivers in-character response to 'duped' Sarah Palin

    Sacha Baron Cohen delivers in-character response to 'duped' Sarah Palin

    She is challenging Baron Cohen and Showtime to donate proceeds from the show to a veterans' charity. Palin took to Facebook to air her rage at Cohen in a lengthy screed on Tuesday.
    China: 'We're Ready to Retaliate Against US Tariffs'

    China: 'We're Ready to Retaliate Against US Tariffs'

    Those tariffs, including the set that will take effect on Friday, are aimed mostly at industrial goods and technology. China is expected to retaliate with tariffs on $34 billion of U.S. goods, including soya beans.
    Fresh grounds for coffee: Study shows it may boost longevity

    Fresh grounds for coffee: Study shows it may boost longevity

    While the study represents an median view of coffee drinking habits, it is encouraging reading for lovers of the toasted bean. Overall, coffee drinkers were about 10 percent to 15 percent less likely to die than abstainers during a decade of follow-up.
  • Iran's oil minister has hit back at Trump over production demands

    Iran's oil minister has hit back at Trump over production demands

    Meanwhile, US crude oil production has soared by 30 percent in the last two years, to 10.9 million bpd. Output cuts by OPEC and allies since January 2017 have reduced a crude glut.
    German deal to handle migrants faces potential veto

    German deal to handle migrants faces potential veto

    As the CDU and CSU parties hunkered down in Berlin and Munich, leaders on both sides sought to clarify what was a stake. To save her coalition, Merkel agreed to build transit camps for refugees trying to cross into Germany from Austria .

    Cristiano Ronaldo is the equal of two strikers

    Suarez and Ronaldo are both huge worldwide stars tasked with guiding their countries to the World Cup final. But BBC commentator Dion Dublin thinks they need something more if they are to mount a comeback.
  • Serena Williams Is In Trouble At The Women’s Final Of Wimbledon

    Serena Williams Is In Trouble At The Women’s Final Of Wimbledon

    To all the mums out there, I was playing for you today, and I tried but Angelique played really well, she played out of her mind. Angelique Kerber claimed her first Wimbledon title with a 6-3, 6-3 victory over seven-time champion Serena Williams.
    Trump hails Boris Johnson as ‘a friend’

    Trump hails Boris Johnson as ‘a friend’

    Some diplomats fear the president will threaten to pull troops out of Europe without more spending on defense, despite US denials. Trudeau, who was called "weak" by Trump after the G7 meeting, pledged to boost Canadian troop numbers 540, from around 450 now .
    Melania Trump arrives in Arizona for her second trip to immigration facilities

    Melania Trump arrives in Arizona for her second trip to immigration facilities

    Southwest Key is a nonprofit that runs 26 immigrant shelter facilities for children across Texas, Arizona and California. Anticipating a trip to Phoenix , protesters also gathered outside the Southwest Key facility in the city's west side.

CONNECT