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Netflix’s (NFLX) slower subscriber growth sends shares 6.78% lower
Netflix (NFLX) shares slumped 6.78% on Wednesday after the media streaming service’s earnings and subscriber growth both fell short of Wall Street expectations for the latest quarter ending 30th September.
Late on Tuesday, Netflix delivered a $1.74 per share profit for Q3, which was around the same as a year earlier, but a full 40 cents short of the $2.14 analyst consensus.
The number of new paid subscribers added during the last three months also underwhelmed as 2.2 million signed up for a subscription, short of the 3.4 million tally expected.
However, the steady uptick in new subscribers did drive a revenue beat with $6.44bn versus the $6.38bn pre-report forecast.
Netflix appears to have been a victim of its own success earlier in the year when a huge number of people signed up amid the lockdown policies in place in Western countries.
CEO Spencer Neumann said: “To look at Q3, the biggest impact was really the first half of the year and that giant pull-forward in subscriber additions in the first half of the year with COVID.”
Neumann admitted that there would be “some level of slowdown” and that it was difficult to forecast the slower growth due to general uncertainty about market conditions.
Looking ahead to Q4, Netflix expects to add 6 million new subscribers.
Despite the mitigating circumstances, NFLX shares went into negative territory on Wednesday.
Shares were 6.78% lower at $489.80 on the Nasdaq around two hours before close.
Analyst Jim Cramer sees no reason to dump Netflix though and urged CNBC viewers to “just go buy it”.
He said that the latest retreat was an overreaction and that people will come back when they realize that it was actually a solid quarter for the company.
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