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Why the Netflix stock fell on Friday



What Happened

Shares of the streaming TV giant Netflix (NASDAQ: NFLX) slipped on Friday, falling 6.2% before the market closed.

The stock decline was probably partly driven by Friday's broader market decline in many growth stocks like Netflix. But a look back at the stock price may also reflect some disappointment with the company's third quarter results.

  A person watching a large viewing video

Image source: Getty Images.

So what

Shares of Netflix originally jumped after the company's third-quarter results, which were released after the market close Wednesday. But that gain faded beyond the trading day on Thursday, with the stock closing a modest 2.4%, well below the near 1

0% gain share seen in aftermarket hours on Wednesday.

While Netflix beat analysts' estimates on some metrics – namely earnings per share and international subscription growth – it reported poorer than expected domestic subscriber growth during the period. The stock's decline on Friday may reflect a more cautious outlook for the company as investors consider the implications of the company's inability to grow subscribers meaningfully in the United States in recent quarters.

Now what

Management potentially contributed to investor concerns by lowering the outlook for year-round subscriber growth, reflecting an intensifying competitive environment. The company previously expected that total net paid membership fees in 2019 would be greater than they were in 2018. But now management expects this year's subscriber growth to be slightly less than last year.

Of course, management can only exercise more caution in their guidance in the face of uncertainty about how new streaming TV services from Apple and Walt Disney will affect the company. The two companies both launch streaming TV services in November.


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