Netflix stock is plummeting after it missed subscriber targets by nearly 1M

Netflix stock is plummeting after it missed subscriber targets by nearly 1M

Netflix stock is plummeting after it missed subscriber targets by nearly 1M

Moving forward, Netflix forecasts a total revenue of US$3,988 million for Q3 18.

The company's shares fell more than 13 percent shortly after the start of trading on Tuesday before rebounding, with the stock trading down almost 6 percent as of 2:40 p.m.

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".

However, GBH Insights saw the Netflix subscriber forecast miss as a "speed bump", rather than start a downward trend, reasoning that the "content arms race continues to be a major tailwind" for the company. 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.

"Netflix is in a business that varies by quarter anyway and perhaps the company shouldn't have gotten too enamored with the insane success of the last two quarters, which was invigorating but not sustainable", Forrester analyst James McQuivey said.

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It signed up 4.47 million subscribers internationally, while analysts were expecting 4.97 million.

Netflix added 5.15 million customers from April through June, 1 million fewer than forecasts from Thomson Reuters I/B/E/S and down from 7.41 million in the first quarter.

During the quarter, net income rose 32.5 percent, to $384.3 million, or 85 cents a share, from $65.6 million, or 15 cents, a year earlier. Revenue climbed 6 percent to $3.9 billion. It is making a big push in India.

What is not clear is where the hurdles to that unbroken run of growth will come from, be it stronger competition from Amazon Prime or the changes in control of major film and TV franchises heralded by Walt Disney Co and Comcast Corp's bid for Twenty-First Century Fox Inc.

Hastings said the company would make adjustments to account for foreign exchange rates in order to "steadily" increase operating margins.

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Netflix cited an array of competitors, starting with YouTube.

Apple, the world's most valuable company, is spending about $1bn on original programming for a video service of its own.

At the same time, cable distributors are offering smaller and cheaper bundles of channels.

AT&T just bought Time Warner for $81 billion in a deal that includes HBO - a pay TV and video streaming service that AT&T plans to expand in an attempt to lure more viewers away from Netflix. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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