Despite beating earnings expectations, Netflix missed its own guidance for subscriber numbers in a lackluster second quarter. The streaming-media company saw its stock drop sharply downward in after hours trading.
During the latest financial quarter, Netflix reported adding 1.7 million subscribers which was well below the company’s forecast of 2.5 million subscribers. The company added 3.28 million subscribers during the second quarter of last year, but came up 1.5 million short of last year’s mark.
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The streaming company is aiming at international expansion, but the recent news resulted in the Netflix stock dropping down sharply by $14.60, or 15 percent, to $83.80 in after-hours trading, according to The Hollywood Reporter.
Netflix commented in a statement while releasing second quarter results on Monday: “We are growing, but not as fast as we would like or have been. Disrupting a big market can be bumpy.” The company also said that it added 160,000 subscribers in the U.S. market, but were aiming at adding around 500,000 subscribers.
The streaming service also recorded earnings in the second quarter of the amount of $41 million, or 9 cents per-share. Overall revenues were in the amount of $1.96 billion and were still able to beat an analyst’s forecast of 3 centers per-share for the quarter.
One way Netflix plans to regain some lost revenues is by increasing the prices for current subscribers. The financial statements also mentioned: “With respect to ungrandfathering, currently, more than half of our US members pay only $7.99 or $8.99 for our $9.99 HD 2screen plan. We will phase out this grandfathering gradually over the remainder of 2016, with our longest tenured members getting the longest benefit.”
Netflix has blamed expansion plans and shortfalls in the Australia/New Zealand market for some of the issues facing the company.
Do you think Netflix will bounce back after this lackluster second quarter?
