Netflix Shares Plunge After Big Miss on Subscriber Growth
*By Kavitha Shastry*
Shares of Netflix plunged after hours Wednesday, after badly missing expectations for global subscriber growth in the second quarter. The company also posted a surprise drop in U.S. users.
In a letter to shareholders, the streaming giant attributed the weak performance to price increases that began rolling out earlier this year and a relative dearth of new content. It also pointed out particularly strong growth in the first quarter.
The company tried to brush off concerns that increased competition had an impact, saying, "There wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions."
Netflix said it expects to return to a more normal rate of growth in the back half of the year. The third season of "Stranger Things" debuted a few days after the end of the second quarter, and the final run of "Orange Is the New Black" hits the service next week.
But analysts have raised concerns over the looming loss of its most popular titles, "The Office" and "Friends," which will exclusively be offered on rival services in the next few years.
Netflix profit came in slightly better than expected, at $0.60 a share versus analyst expectations for $0.56, but revenues of $4.92 billion fell just short of estimates.
The company added 2.8 million users internationally — Netflix previously said it expected to gain 4.7 million customers. And some analysts had predicted up to 5.3 million new subscribers. In the United States, Netflix shed 126,000 members.
For the current quarter, it expects to add 7 million customers globally, with 800,000 in the U.S.
Shares were down more than 10 percent after hours, but even with the drop, Netflix shares are up about 20 percent this year.
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The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
