Netflix shares plunge as global growth falls short
July 18: Netflix Inc said on Wednesday it lost US streaming customers for the first time in eight years and missed targets for new subscribers overseas, an announcement that jarred investors ahead of looming competition.
Netflix shares sank nearly 12per cent in after-hours trading after the company posted quarterly results that showed it shed 130,000 US customers from April to June.
The world's dominant subscription video service said its slate of new shows during the quarter was not as appealing as expected and price increases in some markets dented growth.
Netflix reported that it added 2.83 million paid streaming subscribers outside the United States, below analyst expectations of 4.8 million, according to IBES data from Refinitiv. Analysts had forecast a US gain of 352,000.
"Our missed forecast was across all regions, but slightly more so in regions with price increases," the company said in a letter to shareholders.
"We think Q2's content slate drove less growth in paid adds than we anticipated," it said.
Chief Executive Reed Hastings said on a video call with analysts the company's internal projection still showed it expected to end 2019 with more new subscribers than it added in 2018. It currently boasts 151.6 million streaming customers worldwide.
"I think our position is excellent," he said.
Netflix has staked its future on global expansion and creating original TV shows, movies and documentaries to attract new customers and keep the existing ones paying monthly subscription fees.
"Even though we expected slowing user growth in the US, a negative paid net additions number is shocking," said Clement Thibault, analyst at financial markets platform Investing.com.
"The problem is that with intensifying competition, there is no guarantee Netflix has the pricing power needed to raise prices without massively bleeding users."
Netflix raised prices in Britain, Switzerland, Greece and Western Europe during the second quarter.
A Reuters/IPSOS poll in March found 81per cent of US Netflix subscribers polled said they would cut the service if the monthly price rose by $5. -Reuters