Netflix Inc. stunned Wall Street by attracting fewer subscribers than expected last quarter, renewing concerns that the video-streaming service has become an investment bubble. "This might have a further negative impact on its third quarter results". Over the previous eight quarters, the company has on average topped its total net subscriber addition guidance by about 1 million, with three-quarters of that coming from worldwide markets, according to Wedbush Securities analyst Michael Pachter.
Bloomberg analyst Geetha Ranganathan was expecting the company would add about 5 million overseas customers during the quarter. Global subscriber net additions are projected at 4.35 million, again, below the average 5.095 million.
"These are still millions of new subscribers, even if they didn't meet the expectations that might have been set by the last two quarters, which were extraordinarily high", he said.
Revenue: $3.91 billion. Analysts were expecting $3.94 billion.
For the current quarter, the company is projecting revenue of $3.988 billion, below the consensus for $4.126 billion.
Netflix said it made a profit of $384m on revenue of $3.9 billion in the recent quarter, compared to net income of $66m on $2.8bn in revenue in the same period previous year.
Membership in the quarter grew 5.2 million to a total of 130 million, matching the same period previous year but a million shy of what Netflix had forecast, according to a letter released along with earnings figures. 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. In the second quarter of 2017, it earned 15 cents a share.
Investors value Netflix at a far higher level than other media companies of similar size because of that potential for future growth.
Hastings said the company would make adjustments to account for foreign exchange rates in order to "steadily" increase operating margins.
Apple, the world's most valuable company, is spending about $1bn on original programming for a video service of its own.
At the same time, Netflix faces growing competition.
Meanwhile, cable distributors are offering smaller and cheaper bundles of channels.
AT&T has just bought Time Warner in a deal that includes HBO - a pay TV and video streaming service that AT&T plans to expand in an attempt to lure more viewers away from Netflix. "Our strategy is to simply keep improving, as we've been doing every year in the past".