Netflix to 'simply keep improving' despite lack in subscriber growth

Posted July 18, 2018

Netflix shares sank about 13 percent after hours when the streaming service reported subscriber numbers that were lower than expected.

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. Internationally, the company added 4.47 million subscribers, versus the 5.11 expected.

The company did roughly meet analyst expectations on earnings, at $3.91 billion compared to estimates of $3.94 billion.

With all this, the stock is tanking.

It marked the first time in a more than a year that Netflix had not exceeded its subscriber growth projections.

"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. Its total base of 57 million subscribers in the USA dwarfs Hulu's 20 million users and HBO's 5 million.

Some investors have seen Netflix as the future of television-a sure-to-be dominant hub for all our entertainment viewing.

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Netflix said it's "making good progress with our original feature films", in a letter to its shareholders.

Netflix said it added just 670,000 subscribers in the US for the period ending in June, about half of its own projection of 1.2 million.

Revenue in the three months ended in June rose to $3.9 billion, yielding earnings per share of 88 cents.

Netflix predicted it would add five million subscribers in the current quarter, which ends in September, slightly slower than the pace a year ago.

The Silicon Valley-based company noted that it is beginning to "lead artistically" in some categories with its original content, earning enough Emmy nominations this year to break a 17-year top-spot streak by HBO.

In the letter to shareholders, Netflix said it expected more competition from worldwide players including ProSiebenSat 1 Media in Germany and on-demand service Salto in France.

Netflix said Monday that it expects more competition, but dismissed any potential negative impact on its business. Disney is selling an internet version of its sports network ESPN and plans to introduce a general entertainment video service next year. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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