Netflix shares sink as subscriber growth misses target

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Netflix shares sink as subscriber growth misses target skynews netfliw netflix film service 4343204

Netflix shares plunged in after-hours trading in New York after the company’s latest results signalled it was facing stronger competition for customers.

The video streaming service’s stock lost 14% of its value after it reported that world subscription growth during the April to June quarter came in more than one million down on what the market was expecting.

It meant that Netflix, whose shares have more than doubled in value in the year to date amid a strong run for subscriber growth, was on course for the biggest drop in its market value in four years ahead of the market open on Tuesday.

That was despite it adding 5.1 million households over the three months – giving it 130 million overall with 57.4 million in the US and nine million in the UK. Profits and revenue beat expectations.

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However, Netflix forecast a slower rate of household subscription growth during the current quarter.

It is a crucial measurement for investors as subscriptions are key to funding the company’s investment in its own TV shows and movies – expected to hit $8bn (£6bn) this year alone.

The company’s growth surge has laid down the gauntlet to rivals worldwide including Apple, Amazon and Google – prompting a surge in merger and acquisition activity among traditional providers including AT&T’s purchase of Time Warner for $81bn.

Disney, which is seeking to purchase 21st Century Fox’s entertainment assets in the US, is planning to launch its own streaming service.

Sky, the owner of Sky News, is also among broadcasters set to come under new ownership as part of that drive to bolster access to content.

Earlier this year the company signed a deal with Netflix that will allow its customers to access Netflix through its Sky Q platform.

Netflix admitted it had over-estimated its second quarter subscription growth after consistently under-shooting the numbers previously.

Commenting on the reaction of shareholders Eric Schiffer, chief executive of private equity firm Patriarch, said: “Investors are devastated by Netflix’s Q2 projection that went down in dramatic flames.

“Now future projections are suspect and that decimates valuation,” he added.



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