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Netflix is adding subscribers at a slower pace than expected, renewing fears that its growth may splash as the video streaming service tries to fend off fiercer competition. The figures released on July 16 are a rare disappointment for a company that has captivated investors with its ability to consistently exceed expectations.
But Netflix missed its target in April-June, tumbling its high-flying shares about 14 percent to $ 345.63 in extended trading. Shares had more than doubled before liquidation. If the stock plunges on the same trajectory during Tuesday's regular trading session, it will be the biggest drop in almost four years.
In a research note, GBH Insights analyst Daniel Ives called the second quarter a "short-term punch" for Netflix.
The company earned 5.1 million subscribers worldwide during the quarter. number that management thought they could do. It marked the first time in more than a year that Netflix had not exceeded its subscriber growth forecasts. As of June 30, Netflix had 130 million subscribers, including 57.4 million in the United States.
Netflix expects that it will add 5 million subscribers to the current quarter, which ends in September, a little less quickly than a year ago. The spring and summer months traditionally mark the most lethargic period of Netflix as more and more people go on vacation and spend time outdoors instead of watching a video
. beat analysts' estimates. Earnings rose 32% over last year to reach $ 384 million, or 85 cents per share. The turnover rose 6% to $ 3.9 billion
. It is vital for Netflix to attract more subscribers and money because it expects to continue to spend more for TV shows and exclusive films. The company will spend up to $ 8 billion in programming this year. Ives expects Netflix to inject another $ 10 billion into its video mix next year.
Netflix has already faced the challenges of Amazon, YouTube and Hulu in the video streaming market and is expected to face even stronger competition. AT & T just bought Time Warner for $ 81 billion in an agreement that includes HBO – a pay-TV service and video streaming that AT & T plans to develop in an attempt to attract more of viewers far from Netflix. And Walt Disney hopes to conclude a $ 71 billion deal to purchase 21st Century Fox's popular entertainment franchises to power a streaming video service that Disney will debut next year.
Meanwhile, Apple – the most valuable company in the world – is spending about "For now, Netflix is still ahead of its closest competitor, but there will be a bull's eye giant on the back of Netflix over the next 18 to 24 years. ", predicted Ives in an interview.
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