Netflix shares fall 14% after it misses subscriber, revenue expectations

Netflix shares plunge in after-hours trade after forecast miss

But Netflix missed its target badly in the April-June period, causing its high-flying stock to plummet by about 14 percent to $345.63 in extended trading. Coming off its best back-to-back quarters for total subscriber growth in its history, Netflix fell short of subscriber estimates for the first time since Q1 2017. Worldwide subscriber net additions are projected at 4.35 million, again, below the average 5.095 million. Wall Street watches them closely and even a slight miss can...

With all this, the stock is tanking.

Netflix admitted it had overestimated its second quarter subscription growth after consistently undershooting the numbers previously. Revenue came in at $3.9bn, up from last year's $2.8bn, while net income for the quarter was $384m, and increase from $66m the year prior.

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In its trying-hard-to-be-positive letter (PDF) to shareholders, Netflix said that it had "a strong but not stellar Q2, ending with 130 million memberships". Its total base of 57 million subscribers in the USA dwarfs Hulu's 20 million users and HBO's 5 million.

"After four consecutive quarters of beating its own guidance, and analysts' expectations on key metrics such as revenues, profits, and subscriber gains, Netflix disappointed with a weak Q2", said eMarketer principal analyst Paul Verna.

Netflix will spend as much as $8 billion producing and acquiring TV shows and movies this year, including Disenchantment from The Simpsons and Futurama creator Matt Groening, new seasons of House of Cards and Making a Murderer, and presumably several series and films yet to be announced.

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And if you've noticed more billboards for "Stranger Things" and "The Crown" of late - two shows that helped make Netflix the most-nominated network for the Emmys last week - there's a good reason.

In the letter to shareholders, Netflix said it expected more competition from global players including ProSiebenSat 1 Media in Germany and on-demand service Salto in France.

AT&T is planning to hike spending on HBO to make it more competitive with Netflix, and Apple and Facebook are also raising their investments in content. And Walt Disney is hoping to close on a $71 billion deal to buy prized entertainment franchises from 21st Century Fox to feed into a video streaming service Disney will debut next year.

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"Our strategy is to simply keep improving", the company stated.

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