Netflix Stock Falls After Losing Millions of Subscribers


Netflix Stock Falls After Losing Millions of Subscribers

Netflix Stock Falls After Losing Millions of Subscribers

Your Netflix stock just took a serious hit. The streaming service reported that it lost more than 2 million subscribers in the second quarter of this year, which led to an overall revenue drop of 8% year-over-year to $3 billion and caused shares to fall by 26%. Overall, Netflix says that its number of streaming subscribers shrank from 83 million at the end of last quarter to 81 million as of June 30th, 2018.

Netflix stock falls on Monday

Netflix shares fell 26% in Monday trading after it reported losing more than 2 million subscribers in Q3. The company lost 1.3 million paid US subscribers, which is its worst quarter for domestic subscriber losses since 2011, when Netflix was raising prices and aggressively building its DVD-by-mail service. It also shed 700,000 paying customers outside of North America—its first time ever to lose international subscribers on a quarter-over-quarter basis. Wall Street had predicted that Netflix would only lose about 590,000 domestic members—but nobody was expecting it to also lose nearly 1 million international members.

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Netflix stock hits all-time high in February

Back in February Netflix’s stock price hit an all-time high as investors anticipated a record number of new subscribers. Netflix ended up with 48 million new subscribers in 2017 and was expecting 50 million more in 2018. When Netflix reported earnings next week, there was a lot of attention placed on how many subscribers it gained and lost in Q1 2018 compared to Q4 2017. In other words, how many customers did Netflix kept? And how many did it lose? Analysts were actually expecting that Netflix subscriber base to fall by nearly 200,000 people. The same happened following that anticipations.

Netflix stock at an all-time low, but subscriber loss is not as bad as analysts thought

Netflix shares fell 26% after it reported a loss of nearly 1 million subscribers, much worse than expected. But many in Wall Street thought Netflix would lose 2 million more subscribers, so investors are just as worried about lower-than-expected growth for Netflix as they are about subscriber losses. They’re not sure what to make of a slowing business that’s consistently losing customers without seeing an increase in revenue. Investors had hoped that new movies from Disney and original content from other streaming services would help stem losses, but now we have confirmation that it didn’t work.

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Netflix stock drops 8% as subscriber count disappoints again

Netflix shares plunged 8% in after-hours trading on Monday as its third-quarter subscriber numbers fell well short of Wall Street expectations. Netflix added 5.3 million subscribers globally, it said Monday, a marked drop from its July forecast for 6.2 million new subscribers and its original expectation for 7 million new customers during the quarter. The company's third-quarter earnings report follows months of growing investor concern that streaming services like Netflix can't sustain their massive global growth at current levels if they continue to raise prices and invest more money in content. Revenue totaled $3 billion, up 24% from last year; but investors had been looking for $3.7 billion, according to Bloomberg News' estimates.

What caused Netflix's stocks to plummet?

There are many factors that can contribute to a fall in stock prices, including changing consumer preferences. Netflix has been on an impressive growth trajectory for several years now, reporting 36 million domestic subscribers in 2011 and 47 million subscribers as of December 2013. But investors were shocked to learn that Netflix had lost more than 2 million subscribers during Q3 2014 due to a recent price hike and subscriber dissatisfaction with new offerings such as its Qwikster DVD-rental spinoff. The market's reaction shows just how sensitive companies' stocks can be to even small changes in their business outlooks or strategies.

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