Netflix (NASDAQ:NFLX) shares were sinking after the company reported its second quarter financial report that revealed a big miss on subscriber growth.
The streaming giant reported that it had 674,000 domestic subscribers added during the quarter. Per FactSet and Street Account, analysts had been expecting a lot more than that at 1.23 million subscribers.
Netflix (NASDAQ:NFLX) reported 4.47 million subscribers were added internationally in comparison to the 5.11 million subscribers that had been anticipated.
This is the first time in five quarters that Netflix had missed in this metric. Shares tumbled over 14% as a result as traders showed their concern in after-hours trading on the report.
In explaining the miss, Chief Financial Officer David Wells said during the earnings call, “In general I would say acquisition which is up year-on-year, but wasn’t up as much as we thought it was going to be. So and it was pretty broad across multiple markets, it wasn’t even one area of the world. And as you pointed out, after four consecutive quarters of under-forecasting the business we over-forecasted the business.”
He added, “And you know, we strive for accuracy, we clearly didn’t have the number, but we think based on the rolling 12 months of growth that we’ve had compared to the prior rolling 12 months of growth the U.S. up slightly, internationally up significantly that the background and underlying characteristics of the business haven’t changed.”
“Our total addressable market is intact and hasn’t really changed based on those 90 days of actuals. And in general we think that the conversion and growth to internet enabled entertainment is intact and people are loving it. People are adopting Netflix around the world increasingly more in our newer markets as well. And so I think we’re still on track for a strong growth year this year and maybe it’s going to come in a little bit differently than we expected and others expected..” He concluded.
Next to the miss on subscriber growth, Netflix had also reported a slight miss on revenue compared to estimates.
Revenue for the quarter was $3.91 billion while estimates had called for $3.94 billion.
Earnings per share (NASDAQ:NFLX) for the quarter was 85 cents, which included $85 million in non-cash unrealized gain.
Looking ahead the company has also forecasted dismal guidance for the third quarter. It now expects 5 million subscribers total to be added in comparison to the over 6 million that analysts are waiting for. Internationally Netflix (NASDAQ:NFLX) expects 4.35 million new subscribers and 650,000 new subscribers domestically.