Netflix (NFLX) reported disappointing Q2 numbers after the closing bell and shares plunged 15%, the company added only 160,000 domestic subscribers compared to the already reduced guidance of 500,000. Meanwhile, the company added 1.5m international subscribers compared with the guidance of 2m. Into mondays close the company had already fallen 14% this year and just yesterday it dropped another 15% compared with the rise of 6% of the S&P.
Netflix investors need to learn that trees don’t grow to the sky. Netflix may keep growing but not as fast as it used to.
Also Read; Pressure On Dstv as Netflix Finally Launches In Kenya
“We are growing, but not as fast as we would like or have been,” management said. “Disrupting a big market can be bumpy, but the opportunity ahead is as big as ever and we continue to improve every aspect of our business.”
One key overhang for the business remains in the coming quarters, as millions of subscribers face price increases in the second and third quarters, according to SunTrust’s Bob Peck.
Meanwhile, the US business — at current penetration levels above 50% of broadband households — is slowing. While low numbers were already backed into expectations, according to Hargreaves, Netflix missed even reduced expectations.
