Netflix Stock Tumbles After US Subscribers Drop For the First Time Ever

Netflix saw its first-ever decline in paid U.S. subscribers in the second quarter, losing 126,000 U.S. users when Wall Street was expecting 352,000 domestic adds. Barron’s reports: The slight drop in Netflix’s U.S. subscriber base, combined with fewer-than expected international adds in the second quarter, sent the company’s stock tumbling over 10% in after-hours trading Wednesday. The streaming company still reported better-than-expected earnings, but investors tend to focus on its subscriber trends and not much else. The company said it sees a return to subscriber growth in the third quarter.

For the second quarter, Netflix reported 60 cents in earnings per share, versus the 56 cents analysts had been expecting. Revenue came in at $4.9 billion, about equal to the consensus estimate. That compares with 85 cents in earnings per share on $3.9 billion in sales in the same period last year. Second-quarter net income was $270.7 million. But Netflix’s subscriber numbers tend to be the most important metric for investors, and Netflix fell short where it mattered. It added 2.8 million net new international subscribers but lost 126,000 U.S. users in the second quarter. Wall Street had been expecting 352,000 domestic and 4.8 million international adds, and Netflix had guided to a total of 5.0 million new subscribers. For the third quarter, Netflix “calls for $1.04 in EPS, $5.3 billion in revenue, and for user numbers to return to growth to the tune of 800,000 new domestic subscribers and 6.2 million international subscribers,” the report says. “That compares with 89 cents in EPS on $4 billion in sales in the same period last year, when Netflix also added 1.1 million new domestic subscribers and 5.9 million international subscribers.”

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