Netflix’s stock sinks as 2Q subscriber growth disappoints

Netflix has added far fewer subscribers than management had projected, renewing fears that its growth may sputter as it tries to fend off fiercer competition.

The company gained 5.1 million subscribers worldwide during the April-June period, more than 1 million customers below the number that management had targeted. The company ended the second quarter with 130 million subscribers, including 57.4 million in the U.S, according to figures released Monday.

Despite that stumble, Netflix’s earnings still exceeded analyst estimates. Netflix Inc. reported profit of $384.3 million, or 85 cents per share. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 80 cents per share.

The internet video service posted revenue of $3.91 billion in the period, falling short of forecasts of $3.94 billion.

Netflix’s stock has always fluctuated with the ebbs and flows of its subscriber growth. The second-quarter letdown caused Netflix’s stock to sink by 14 percent to $343.40 in extended trading after the numbers came out. Before the sell-off, Netflix’s shares had more than doubled so far this year.

Netflix already has been battling challenges from Amazon, Google’s YouTube and Hulu in the video streaming market, and it is likely to face even stiffer competition as AT&T gears up to produce more programs for HBO, which it acquired as part of its recently completed acquisition of Time Warner. Walt Disney Co. is also preparing to launch its own digital video service. As part of that expansion, Disney has stuck a reached a $71 billion deal to acquire prized video franchises from 21st Century Fox, though Comcast is also vying for Fox.


Elements of this story were generated by Automated Insights ( using data from Zacks Investment Research.


Author: Tech Poster

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