Netflix plunges 14% after it misses expectations on revenue and subscriber additions

  • Netflix plunges 14% after it misses expectations on revenue and subscriber additions

Netflix plunges 14% after it misses expectations on revenue and subscriber additions

All told, Netflix over the last three months added 670,000 new subscribers in the United States and 4.47 million new subscribers overseas. Specifically, Netflix is anticipating a net add of 5 million new subscribers for the September quarter, a tad below some analyst projections that saw Netflix bringing 6 million new subscribers on board. Worldwide subscriber growth also fell far short, as Netflix added 4.47 million against an expected 4.97 million. The reason behind this is that Netflix is now has a free cash flow of negative $559 million meaning they once again spent more in the second quarter of 2018 than they made.

Netflix also provided third quarter guidance that was below analyst forecasts.

Despite the "near-term gut punch", Netflix is still well-positioned for future growth, GBH Insights analyst Daniel Ives wrote in a note.

Netflix is scheduled to report its second-quarter 2018 earnings on Monday afternoon after the markets close. That erased roughly $25 billion from the company's market valuation.

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. For the current quarter ending in October, Netflix said it expects revenue in the range of $3.99 billion.

Revenue: $3.91 billion. Analysts were expecting $3.94 billion.

The good news is Netflix did see a 43% increase in streaming revenue likely from the higher subscriber numbers and new price increase. "In addition to succeeding commercially, we are starting to lead artistically in some categories, with our creators earning enough Emmy nominations this year to collectively break HBO's wonderful 17-year run". "Our strategy is to simply keep improving, as we've been doing every year in the past".