Netflix badly undershot its subscriber forecasts for the second quarter of 2019 — posting its first net U.S. customer decline since 2011 while growth slowed considerably overseas. The company…
while growth slowed considerably overseas. The company added 2.7 million subs worldwide, almost half as many as the 5 million it had projected.shares took a predictable hit, opening down 10% on Thursday. The question Wall Street analysts are debating: Are the Q2 results a sign the wheels are coming off the streaming giant, or merely a blip on the long-term road to continued growth?
Blackledge remains positive on Netflix’s growth potential given strong initial Q3 subs trends and the company’s content slate for the second half of 2019, which includes in the third quarter “Stranger Things” season 3, “Orange Is the New Black” season 7, “La Casa de Papel” season 3 and “Mindhunter” season 2.The lower-than-expected Q2 results show Netflix will have increasingly tough sledding in the U.S.
Investors shouldn’t “overreact” to Netflix’s Q2 miss, opined Morgan Stanley’s Ben Swinburne. He noted the second quarter is seasonally “a light TV viewing quarter” in general and noted that the magnitude of the subscriber miss was in line with Netflix’s previous misses. And while the price hikes may have boosted churn levels, the price increases drove strong revenue and earnings growth — revenue was up 26% in the period, and Q3 guidance points to over 31% growth.
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