(Bloomberg) – Netflix Inc. shocked investors by reporting a decline in US customers and much slower growth overseas, a sign that streaming giant is losing momentum just as its competitors are preparing to beat.
The shares doubled as much as 13% to $ 314 in late trading after Netflix reported the loss of 130,000 customers in the US – the result of higher prices and a weak slate of TV shows. 2.8 million subscribers registered internationally during the period, about half what the company predicted.
"Netflix has a difficult road ahead, with threatening competition and removal of popular content," said analyst Eric Haggstrom, analyst at EMarketer Inc. But a stronger selection of new shows in the current quarter may help attract past subscribers , he said.
The quarter represents the largest black eye for Netflix since 2011, when the company split its DVD city mail business from its streaming business. This led to increased prices for its customers and resulted in over 800,000 errors in the United States. The company had planned to call the Qwikster DVD service, but it went back on schedule after investors and customers scoffed at the idea.
Netflix gave a much more remarkable view of the current quarter. The company forecasts 7 million new registrations during the period, as several top views – such as "Stranger Things" and "Orange Is The New Black" – come back with new seasons.
For now, second quarter deficiency is renewal investor concern about the company's heavy program spending and low profitability. The loss of customers in the United States was the first since the Qwikster debate, and suggests that Netflix can run into price resistance or the boundaries of the addressable home market.
It has predicted that it can reach as much as 90 million customers in the United States, compared to 60.1 million today.
Analysts expect the company to have a tougher second half due to a heavy release plan. Even after the downturn last year, Netflix expects to continue to have its best year of customer growth in 2019.
But the competition is coming. Walt Disney Co. and Apple Inc. are planning to introduce streaming services this year, while offering from Comcast Corp. and AT&T Inc. come out in 2020. Netflix has said that these rivals will not eat in the customer, but competitors plan to take back rights to some of the service's most popular programs.
International results also flagged, with the company missing its own forecast of 4.7 million. It expects to score another 6.2 million in the current third quarter, along with a modest 800,000 in the US
. The second-quarter result fell to 60 cents per share, but beat analysts' estimates at 56 cents. Sales increased by 26% to $ 4.92 billion, compared to $ 4.93 billion.
The stock had increased 35% for the year at the conclusion of regular trading, almost twice as much as the increase in S & P 500. The decline spread to related stocks such as Roku Inc., which makes set-top boxes providing the streaming service . Its stock fell as much as 3.6% after hours.
To contact the reporter on this story: Lucas Shaw in Los Angeles at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Turner at nturner7 @ blomberg.net
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