Stock Tanks on Weak Subscriber Adds — Netflix Earnings

Netflix's stock price continued to slide, a sign investors are anxious the video-streaming service's faltering subscriber growth could augur a broader slowdown.

Despite the weak quarter, and a lowered outlook for the third quarter, Emarketer expects Netflix to remain the clear leader among video streaming services in the US.

Netflix stock is now in a free fall in after-hours trading. Currency had a +$65 million impact on worldwide revenue year over year (+13% global ASP growth on a FX neutral basis), but this positive impact was smaller than we had forecast 90 days ago as the U.S. dollar strengthened meaningfully against many currencies since our Q1'18 earnings report in April. If the stock plunges on the same trajectory during Tuesday's regular trading session, it will be the steepest drop in almost four years.

"In uber growth stories, especially in technology, from Apple to Amazon to Netflix, you're going to run into these one- or two-quarter issues when they're white-knuckle periods in the very near-term", he said.

Subscriber additions: 5.2 million total - 1.1 million in the United States and 4.1 million internationally.


Still, Netflix ended Q2 with 130.1 million global subs, up 25% year over year, with 56 million in the USA and 72.8 million elsewhere. This marks the first time in five quarters that the streaming giant has failed to hit subscriber projections. This time, for Netflix, it was a negative - membership growth seems to have stalled. Yet while revenue rose more than 40 percent, it lagged the $3.94 billion analysts' had expected.

The streaming service that has ventured in recent years into original productions, such as The Crown, House of Cards and Stranger Things, reported a profit of $384.3 million, or 85 cents a share, up from 15 cents a share the previous year.

Some investors have seen Netflix as the future of television-a sure-to-be dominant hub for all our entertainment viewing. It also fell short on total revenue.

Netflix is still expecting a big second half of 2018 with many new hit shows still to come and several big deals.

"Our viewing is setting year-over-year records, the shows that we have coming", he said in a conference call on Monday. Disney is selling an internet version of its sports network ESPN and plans to introduce a general entertainment video service next year.


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