Netflix stock crashes after hours as company releases quarterly earnings report
If you have been a worried shareholder, Netflix released its second quarter earnings today. And if you have not checked your portfolio today, it is not a pretty scene.
The stock fell nearly 16.7% after-hours after the earnings report was released. However, if you have been in the Netflix shareholders club, you know this is pretty standard for the stock. The company stock could currently be risky, nevertheless an opportunity for shorts.
But what caused the drop? The company announced that it added 1.7 million subscribers this quarter, which fell 1 million short to expectations. Especially, in contrast to the same quarter last year which had 3.3 million new subscribers.
The revenue for the quarter was $1.8 billion, which again fell short of expectations.
CEO Reed Hastings had this to say “We are growing, but not as fast as we would like or have been,” this is definitely worrisome for shareholders. However, Hastings blames the reduction in subscribers on the media leak that that Netflix was going to raise the monthly sub price by $2 during the quarter.
He definitely did not compare or blame other streaming services for competition, but let’s be real it definitely had an impact. Amazon Prime has been growing exponentially and hulu has a clear advantage giving users next day content release.
Netflix’s future looks bleak so far, especially with the international release this past January the company is expected to continue loss during the third quarter. This is will definitely add to the already worried stockholders’ stress levels, however we must remember something. This is nothing but a setback for the streaming giant, as it has been signing new content deals everywhere in the world and is expected to release a lot of new content in multiple languages. This will attract not only current subscribers, however many new users.
Here is an infographic on Netflix’s international growth:
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