Published: Tue, July 17, 2018
Money | By Armando Alvarado

Netflix shares tank after subscriber numbers miss targets

Netflix shares tank after subscriber numbers miss targets

The California-based company added 670,000 net subscribers in the USA, far below the 1.19 million net additions expected by analysts polled by Thomson Reuters.

The numbers came in just shy of those projections, with the company revealing on Monday that they added 5.15 million new customers - 4.47 million of which came from non-U.S. markets.

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.

The company reported quarterly revenue of $3.91 billion and earnings per share of 85 cents.

Netflix said in a letter to shareholders that it had overestimated the rate of new shows being added to the platform over the quarter, but remained confident that this would not affect its long-term growth.

Netfllix did release a new season of "13 Reasons Why" and the Marvel series "Luke Cage", as well as a breakout standup comedy special in Hannah Gadsby's "Nanette".

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Investors value Netflix at a far higher level than other media companies of similar size because of that potential for future growth. In second quarter previous year, Netflix posted $2.79 billion in sales. It posted $3.91 billion, compared with an average estimate of $3.94 billion.

Once primarily a service for English speakers, Netflix has ramped up its investment in shows filmed in other languages. Netflix has borrowed money repeatedly to pay for its programming, and expects to spend between $3 billion and $4 billion more in cash than it will generate in 2018.

In announcing earnings, Netflix also touted its historic 112 nominations for this year's Primetime Emmy Awards, announced last week, stealing HBO's 17-year streak as the top-nominated network or service.

Apple, the world's most valuable company, is spending about $1bn on original programming for a video service of its own.

"Right now, Netflix is still miles ahead of its closest competitor, but there is going to be a giant bulls-eye on Netflix's back during the next 18 to 24 months", Ives predicted in an interview. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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