Netflix drops dud on Wall St. as subscriber growth flops
SAN FRANCISCO (AP) — Netflix is adding subscribers at a slower pace than envisioned, renewing fears that its growth may sputter as the video streaming service tries to fend off fiercer competition.
The numbers released Monday mark a rare letdown for a company that has enthralled investors with its ability to consistently top expectations.
But Netflix missed its target badly in the April-June period, causing its high-flying stock to plummet by about 14 percent to $345.63 in extended trading. The shares had more than doubled before the sell-off. If the stock plunges on the same trajectory during Tuesday's regular trading session, it will be the steepest drop in nearly four years.
In a research note, GBH Insights analyst Daniel Ives called the second-quarter showing "a near-term gut punch" to Netflix.
The company gained 5.1 million subscribers worldwide during the quarter, more than 1 million below the number that management had believed it could. It marked the first time in a more than a year that Netflix hadn't exceeded its subscriber growth projections. As of June 30, Netflix had 130 million subscribers, including 57.4 million in the U.S.
Netflix predicted it will add 5 million subscribers in the current quarter, which ends in September, slightly slower than the pace a year ago. The spring and summer months traditionally mark Netflix's most sluggish period as more people go on vacation and spend time outside instead of