Netflix Growth Begins To Slow Down

Netflix has added less than planned new subscribers and the company shares on the stock exchange have declined, Euronews reported.

Globally, the company added a further 2.7 million subscribers, but the experts’ estimates were about 5.05 million for the second quarter. This triggered a sharp drop in the stock price of the platform, which lost 10% of its value, but at the time of closing, the decline was limited to 3.55%.

According to The Verge, the company lost approximately 130,000 subscribers in the United States in Q2, and only gained 2.7 million global subscribers, after projecting it would add 5 million. 

“Our missed forecast was across all regions, but slightly more so in regions with price increases,” CEO Reed Hastings wrote in his letter to shareholders. “We don’t believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions.”

The letter also further stated that: “Q3 has started with Stranger Things season 3, and the first two weeks of Q3 are strong. In addition to the recently released season 3 of Stranger Things , our second half content slate includes new seasons of La Casa de Papel ( Money Heist) , The Crown, and the final season of the iconic Orange is the New Black as well as big films like The Irishman from Martin Scorsese and action movie 6 Underground (directed by Michael Bay and starring Ryan Reynolds). 

While our US paid membership was essentially flat in Q2, we expect it to return to more typical growth in Q3, and are seeing that in these early weeks of Q3. We forecast Q3 global paid net adds of 7.0m, up vs. 6.1m in Q3’18, with 0.8m in the US and 6.2m internationally. Our internal forecast still currently calls for annual global paid net adds to be up year over year. There’s no change to our 13% operating margin target for FY19, up 300 basis points year over year.”

More generally, since the beginning of the year, Netflix’s shares have risen by 35%. This is the second best achievement of FAANG companies, as Americans call the informal group of Facebook, Apple, Amazon, Netflix, and Alphabet, the parent company of Google.

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