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Home / Business / Netflix Whiffs on Member Growth – Motley Fool

Netflix Whiffs on Member Growth – Motley Fool



Shares on Netflix (NASDAQ: NFLX) fall in retrospect on Wednesday, according to the company's fourth-quarter earnings. Starting at. 5:12 EDT, the shares were down 12.4%. The withdrawal of the company's share price comes as the company reported poorer than expected net paid-in membership contributions.

Here you see the growth of the TV company members during the second quarter – and how it lost the mark. [19659004] A group of young people watching TV together "src =" https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F531524%2Fnetflix- stock-earnings.jpg & w = 700 & op = resize "/>

Image source: Getty Images

2.7 million members were not enough

Netflix added 2.7 million new members in its second quarter.

It Unsurprisingly the figure is disappointed. During the period, management expects five million paid membership grants ̵

1; just below the 5.45 million paid members as it was added in the second quarter of 2018.

In addition, weakness in the US may have spotted some investors. The company's paid membership fell in succession on the domestic market, declining from 60.2 million Q1 to 60.1 million, and fortunately, strong international growth helped to recover some of this slack, paid international membership fees came in at 2.8 million. said the paid membership grants were lower than expected in all of them regions.

The company had several excuses for its worse than expected membership growth, citing a slight impact from some of the price increases that were rolled out during the quarter, a larger than expected first-quarter propulsion effect (the membership rate simply beats expectations in the first quarter). and weaker than expected membership growth from content that debuted in the second quarter.

Misses are inevitable [19659007] The share's decline is reminiscent of Netflix's second quarter last year – another period where the streaming TV giant missed his own forecast for the member posts. As in the second quarter of the year, the share fell after last year's beer on member growth as well.

In particular, this year's lack of membership growth is even worse than last year. Paid members in the second quarter of 2019 were 2.3 million members, without the management's expectation. It compares to reaching 650,000 paid members, shortly after the management's forecast last year.

Despite Netflix's significant loss of membership growth, investors should not worry about slowing down membership growth. Just as it was when Netflix lost expectations in the years since, management reminded investors in its second quarterly update on Wednesday that the forecasts are aimed at accuracy (not conservativism). This means that "in some quarters we will be high and other quarters low in relation to our guidance," explained the management in the second quarter shareholder letter.

Of course, if a meaningful retardation in membership growth turns into a pattern in coming quarters, then investors may have to rethink their expectations of the company. Meanwhile, however, there is no reason to think about this underwhelming performance from the key metric.

For what is worth, Netflix provided robust guidance for Stranger Things -driven third quarter. The management forecasted 7 million paid membership contributions during the period, up from 6.07 million in the third quarter of 2018.


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