Stock Tanks on Weak Subscriber Adds — Netflix Earnings

Calling the quarter "strong but not stellar", Netflix boss Reed Hastings cited hurdles such as increased competition from YouTube, HBO, Disney, Amazon and Apple, as well as foreign currency fluctuations as the streaming giants accelerates its worldwide business.

As a reminder, the quarterly guidance we provide is our actual internal forecast at the time we report and we strive for accuracy, meaning in some quarters we will be high and other quarters low relative to our guidance. Paid net adds totaled 5.5m in Q2, compared with 4.7m past year and forecast of 6.1m.

The company's earnings beat Wall Street's forecast, but sales were below targets.

Revenue for the quarter came in at $3.91 billion, lower than the $3.94 billion analyst estimate.

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However, GBH Insights saw the Netflix subscriber forecast miss as a "speed bump", rather than start a downward trend, reasoning that the "content arms race continues to be a major tailwind" for the company. That erased roughly $25 billion from the company's market valuation.

Netflix stock is now in a free fall in after-hours trading.

The news of just 5.2 million total subscriber adds was especially pointed for Wall Street given Netflix's addition of 7.4 million in the first quarter, well ahead of the 6.5 million projected then.

Update: The stock is now down $56.59, or 14%, at $343.90.

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