- Netflix sank as much as 6% in early Wedne sday trading after missing expectations for third-quarter subscriber growth and profits.
- The streaming titan added 2.2 million subscribers over the three-month period, missing Wall Street’s 3.3 million estimate.
- While revenue beat expectations, earnings per share of $US1.74 missed the $US2.13 Street estimate.
- The company urged investors to look past short-term noise and focus on prolonged growth. Netflix would have met its own guidance if the quarter was just 48 hours longer, Spencer Wang, vice president of finance at Netflix, said.
- Watch Netflix trade live here.
Netflix tumbled as much as 6% in early Wednesday trading after third-quarter figures came in below analyst expectations.
The streaming giant added 2.2 million subscribers in the three-month period, falling below Wall Street’s 3.3 million estimate. Netflix previously forecasted 2.5 million new subscribers for the period. The surge in subscriber growth seen at the start of the coronavirus pandemic waned significantly in the third quarter, suggesting much of the early gains were simply pulled forward.
The company’s third-quarter profit also fell below estimates. Revenue surprised to the upside, possibly boosted by various price hikes throughout the quarter.
Here are the key numbers:
Revenue: $US6.4 billion, versus the $US6.38 billion estimate
Earnings per share: $US1.74, versus the $US2.13 estimate
Global subscriber growth: 2.2 million, versus the 3.3 million estimate
A fund manager who’s doubling up the competition in 2020 tells us his strategy for investing in the ‘K-shaped’ economic recovery â€” and details the only 2 stocks he added as the market recovery took off
Netflix emphasised the importance of a long-term view. Its miss on subscriber growth “is really just forecast noise more than anything else,” Spencer Wang, vice president of finance at Netflix, said in a call with analysts, according to Sentieo transcripts.
“We just really don’t overfocus on any 90-day period,” he added. “If the quarter was 48 hours longer, we would have come in slightly above our guidance forecast.”
Still, analysts balked at the quarterly figures. Economic reopening and growing competition from Disney Plus and Comcast’s Peacock “are likely to pressure the stock in the short term,” Jesse Cohen, senior analyst at Investing.com, said.
Stifel analysts led by Scott Devitt praised Netflix’s retention and engagement, but showed concern toward the “sluggish” subscriber-growth trend. The streaming company’s shares “may wrestle with several upside and downside factors” as investors shift focus from encouraging fourth-quarter seasonality to the slowed pace of user growth, the team wrote Wednesday.
Netflix closed at $US525.42 per share on Tuesday, up roughly 63% year-to-date.
Now read more markets coverage from Markets Insider and Business Insider:
Business Insider Emails & Alerts
Site highlights each day to your inbox.