Second quarter Netflix subscription numbers disappoint

Netflix shares plunge in after-hours trade after forecast miss

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

The streaming giant announced Monday afternoon that it had added just 670,000 subscribers in the United States compared to the 1.2 million many analysts predicted in the second quarter, and 4.5 million overseas subscribers instead of the 5.1 million projected.

It has renewed fears that its growth may sputter as the video streaming service tries to fend off fiercer competition.

Bloomberg analyst Geetha Ranganathan said the subscriber miss and weak third quarter estimates cloud future prospects, but "the company's global long-term-thesis remains compelling".

"I think Netflix is approaching a ceiling of subscriber growth, especially here in the U.S. They're going to have to do something bold and different".

Forrester analyst James McQuivey said he believed that the quarterly results were "not a sign of softening in the business overall".

During the latest quarter, Netflix earned a profit of $384 million, or 85 cents a share, a gain of more than 481 percent from the $66 million, or 15 cents, it earned in the year-ago period.

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Total streaming revenue for Q2 18 is US$3,814 million, up from US$2,671 million during the same period a year ago. Earnings per share of $0.85 topped estimates of $0.79, but revenue of $3.91 billion fell short of the expected $3.94 billion. Earlier this month, it debuted its first Indian original series, "Sacred Games", part of a slate of new shows aimed at the vast Bollywood entertainment market.

What is not clear is where the hurdles to that unbroken run of growth will come from, be it stronger competition from Amazon Prime or the changes in control of major film and TV franchises heralded by Walt Disney and Comcast's bid for Twenty-First Century Fox.

In a research note, GBH Insights analyst Daniel Ives called the second-quarter showing "a near-term gut punch" to Netflix.

Hastings said the company would make adjustments to account for foreign exchange rates in order to "steadily" increase operating margins.

AT&T is planning to hike spending on HBO to make it more competitive with Netflix, and Apple and Facebook are also raising their investments in content.

At the same time, cable distributors are offering smaller and cheaper bundles of channels. "Our strategy is to simply keep improving, as we've been doing every year in the past".

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