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.
Bambu Ventures's Kyle Pretsch dives into Lemonaid’s $10M buyout, down from 23andMe’s $400M price tag, and what’s next after Chrome Co.’s dramatic pivot.
Former Cisco Systems CEO John Chambers learned all about technology’s volatile highs and lows as a veteran of the internet’s early boom days during the late 1990s and the ensuing meltdown that followed the mania. And now he is seeing potential signs of the cycle repeating with another transformative technology in artificial intelligence. Chambers is trying take some of the lessons he learned while riding a wave that turned Cisco into the world's most valuable company in 2000 before a crash hammered its stock price and apply them as an investor in AI startups. He recently discussed AI's promise and perils during an interview with The Associated Press.
Grove Collaborative’s CEO shares how the company is reinventing everyday goods with sustainability at the core and working toward a plastic-free future.
Atlanta Mayor Andre Dickens shares plans for affordable housing, community-led growth, and why private and public grocery stores could be key to food equity.
Tesla reported a surprise increase in sales in the third quarter as the electric car maker likely benefited from a rush by consumers to take advantage of a $7,500 credit before it expired on Sept. 30. The company reported Thursday that sales in the three months through September rose 7% compared to the same period a year ago. The gain follows two quarters of steep declines as people turned off by CEO Elon Musk’s foray into right-wing politics avoided buying his company’s cars and even protested at some dealerships. Sales rose to 497,099 vehicles, compared with 462,890 in the same period last year.
Tom’s Guide Editor-in-Chief Mark Spoonauer breaks down Apple & Amazon's latest product drops—what's hot, what's hype, and what really matters for users.
