Netflix’s big year took a sudden downward turn on Tuesday, with shares dropping more than 10 percent in early morning trading, one day after the company posted disappointing Q2 subscriber growth.
Netflix shares were down 13 percent as markets opened, but started to rally a bit an hour into trading, hitting $366.22 a share — down about 8.5 percent from its previous close.
Wall Street is reacting to the Los Gatos, California-based company reporting it added 5.2 million subscribers during the second quarter, coming in about 1 million subscribers short of Netflix’s own estimates. Netflix also shared lower guidance for third quarter subscriber growth than expected, with the company aiming for 5 million new customers, while analysts had projected about 6 million.
CEO Reed Hastings said, “we’ve seen this movie” when it comes to missed subscriber targets on the company’s earnings call. It was the first time Netflix had missed its subscriber targets since Q1 2017. Nevertheless, Hastings said the company’s outlook has “never been stronger,” and pointed to setting “year-over-year records” for viewing hours.
Netflix narrowly missed on analyst estimates on revenue, bringing in $3.9 billion for the quarter, but beat expectations with earnings of 85 cents per share.
Even with Tuesday’s dip, the streaming heavyweight has had a strong 2018, with shares up 90 percent since the start of the year. Last week, Netflix, spearheaded by “The Crown” and “Stranger Things,” broke HBO’s 17-year streak of being the most nominated network for the Emmy Awards.