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Netflix shares sink after it misses Q2 subscriber growth expectations

The streaming video giant added 5.15 million subscribers worldwide

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MUMBAI: Making some analysts’ prediction true, Netflix could not live up to its second-quarter earnings expectations. The streaming video giant added 5.15 million subscribers worldwide compared to the expectation of 6.2 million new subscribers. Following the result, the company’s stock fell down 14 per cent.

In the domestic market of the US, the company added 670,000 subscribers while in international market it signed up 4.47 million subscribers. For domestic market Wall Street analysts expected 1.23 million net adds and 5.11 million overseas for the period. Now, the fear has risen that the company’s rapid growth is slowing down. Despite missing the expectation in terms of subscriber growth, it beat earnings expectations of $0.79 per share by reporting $0.85 EPS for the quarter.

“Investors are devastated by Netflix’s Q2 projection that went down in dramatic flames. Now future projections are suspect and that decimates valuation,” private equity firm Patriarch’s CEO Eric Schiffer said as quoted by Reuters.

“We had a strong but not stellar Q2,” Netflix said in a quarterly letter to shareholders. “This Q2, we over-forecasted global net additions… as acquisition growth was slightly lower than we projected,” the company added. Netflix CEO Reed Hastings said median viewing hours was growing but without sharing any specifics.

Though Netflix is leading the market globally, competitors including Amazon, Hulu, and Apple are also gaining foothold in the market making things tougher for the company. The deal between AT&T and Times Warner is also an indication of increased competition for the platform. Even in India, from where Netflix targets to add a huge number of subscribers, its international rival Amazon and players like Hotstar, Voot, ALTBalaji have strong foothold in the market.

“We’ve seen this movie of Q2 [subscriber net adds] shortfall before, about two years ago in 2016 — and we never did find the explanation to that, other than there’s some lumpiness in the business,” Netflix CEO Reed Hastings said adding that the company continued to perform after that also.

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